MEMBERSHIP INTEREST PURCHASE AGREEMENT
BY AND AMONG
US 1 INDUSTRIES, INC.,
ARL, INC.,
AFICIONADO TRANSPORT, INC.,
AND
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
DATED AS OF DECEMBER 12, 2008
Table of Contents
Page No.
ARTICLE 1. DEFINITIONS 1
ARTICLE 2. SALE AND TRANSFER OF PURCHASED INTERESTS; CLOSING 7
2.1 Purchased Interests 7
2.2 Purchase Price 7
2.3 Earnout Purchase Price 7
2.4 Payment of Purchase Price 9
2.5 Setoff of Certain Guaranty Obligations 9
ARTICLE 3. CLOSING 10
3.1 Closing 10
3.2 Deliveries of Seller 10
3.3 Deliveries of Purchaser 11
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER, AFT AND GUARANTOR 12
4.1 Organization And Good Standing 12
4.2 Authority of Seller, AFT and Guarantor 13
4.3 Title to Membership Interests; Capitalization 13
4.4 Title to AFT Membership Interest 13
4.5 Subsidiaries and Investments 14
4.6 No Violation; Consents 14
4.7 Financial Statements 14
4.8 Absence of Undisclosed Liabilities 15
4.9 Books and Records 15
4.10 Absence of Certain Developments 15
4.11 Title to Assets 16
4.12 Real Property 16
4.13 Accounts Receivable 17
4.14 Inventory 17
4.15 Taxes 17
4.16 Contracts and Commitments 18
4.17 Poprietary Rights 20
4.18 Litigation; Proceedings 21
4.19 Brokerage 21
4.20 Governmental Authorizations 21
4.21 Employees 22
4.22 Employee Benefit Matters 22
4.23 Insurance 24
4.24 Officers and Managers; Bank Accounts 24
4.25 Affiliate and Related Party Transactions 24
4.26 Compliance with Laws 24
4.27 Environmental Matters 24
4.28 Customers and Suppliers 25
4.29 Solvency 26
4.30 Disclosure 26
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER 27
5.1 Organization; Power and Authority 27
5.2 No Violation; Consents 27
5.3 Brokerage 28
5.4 Litigation 28
ARTICLE 6. COVENANTS OF THE PARTIES 28
6.1 Access and Investigation 28
6.2 Operation of the Business of Seller, AFT and the Acquired Companies 29
6.3 Negative Covenant 29
6.4 Required Approvals 29
6.5 Notification 30
6.6 No Negotiation; Exclusivity 30
6.7 Seller Business Transfer 30
6.8 AFT Business Transfer 30
6.9 Reasonable Efforts 31
6.10 Tax Covenants 31
ARTICLE 7. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE 32
7.1 Accuracy of Representations and Warranties 32
7.2 Performance of Seller, AFT and Acquired Companies 32
7.3 Completion of Seller and AFT Business Transfers 32
7.4 Governmental Authorizations 33
7.5 Consents 33
7.6 Releases 33
7.7 No Proceedings 33
7.8 No Claim Regarding Ownership or Sale Proceeds 33
7.9 No Prohibition 34
7.10 No Material Adverse Effect 34
ARTICLE 8. CONDITIONS PRECEDENT TO SELLER' S OBLIGATION TO CLOSE 34
8.1 Accuracy of Representations and Warranties 34
8.2 Purchaser's Performance 34
8.3 No Proceedings 34
8.4 Financing 35
8.5 No Material Adverse Effect 35
ARTICLE 9. INDEMNIFICATION 35
9.1 Indemnification 35
9.2 Administration of Third Party Claims 37
9.3 Offset of Payments 38
ARTICLE 10. ADDITIONAL AGREEMENTS; REMEDIES 38
10.1 Continuing Assistance 38
10.2 Further Transfers 38
10.3 Expenses 38
10.4 Books and Records 38
10.5 Governmental Authorizations 39
10.6 Fleet Operator Agreement 39
ARTICLE 11. TERMINATION 39
11.1 Termination Events 39
11.2 Effect of Termination 40
ARTICLE 12. MISCELLANEOUS 40
12.1 Amendment and Waiver 40
12.2 Remedies 40
12.3 Notices 40
12.4 Binding Agreement; Assignment 41
12.5 Severability 41
12.6 Interpretation 41
12.7 Entire Agreement 42
12.8 Counterparts 42
12.9 Governing Law 42
12.10 Parties in Interest 42
12.11 Confidential Notice of Information 42
ATTACHMENTS
Seller Disclosure Schedule
Schedule 2.5 - List of Certain ARL and AFT Guarantees
Exhibit A - [Intentionally Omitted]
Exhibit B - Form of ▇▇▇▇▇▇▇ Loan
Exhibit C - Form of Contingent Note
Exhibit D - Matters to be covered by Seller Legal Opinion
Exhibit E - Refinanced Credit Facilities
Exhibit F - Form of Guaranty
Exhibit G - Schedule of Assets Transferred from Seller to
the Company
Exhibit H - Schedule of Assets Transferred from AFT to AFT
LLC
MEMBERSHIP INTEREST PURCHASE AGREEMENT
This Membership Interest Purchase Agreement (this
"Agreement") is made and entered into as of the 12th day of December,
2008, by and among US 1 Industries, Inc., an Indiana corporation
("Purchaser"), ARL, Inc., a Pennsylvania corporation ("Seller"),
Aficionado Transport, Inc., a Pennsylvania corporation ("AFT"), and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual and resident of the State of
Pennsylvania, in his personal capacity (the "Guarantor").
Purchaser, Seller, AFT and Guarantor are occasionally referred to
herein individually as a "Party" and collectively as the "Parties."
RECITALS
A. Seller and AFT are each engaged in the business of
interstate trucking and transportation (the "Business").
B. Guarantor is the direct owner of 100% of the
outstanding equity interests in Seller, subject to the terms and
conditions of that certain Stock Purchase Agreement, dated October
1, 2001, as amended (the "SPA") by and among Guarantor, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Seller, and K&C Sales, Inc. Guarantor is the direct owner
of 100% of the outstanding equity interests in AFT.
C. Seller is the direct owner of 100% of the
outstanding equity interests in ARL Transport, LLC as a Delaware
limited liability company (the "Company"), and AFT is the direct
owner of 100% of the outstanding interests in AFT Transport, LLC
as a Delaware limited liability company ("AFT LLC").
D. Immediately following the execution of this
Agreement, Seller will contribute substantially all of the assets
and liabilities of Seller to the Company, AFT will contribute
substantially all of the assets and liabilities of AFT to AFT LLC,
and AFT will contribute all of its equity interests in AFT LLC to
the Company in exchange for approximately a 14% interest in the
Company. Immediately after such contributions, Seller will own
approximately 86% of the outstanding equity interests in the
Company, AFT will own approximately 14% of the outstanding equity
interests of the Company and AFT LLC will be a wholly owned
subsidiary of the Company.
E. Purchaser has agreed to purchase, and Seller has
agreed to sell, 60% of the outstanding equity interest in the
Company, subject to the provisions, terms and conditions of this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Parties, intending to be legally bound, agree as follows:
ARTICLE 1. DEFINITIONS
For purposes of this Agreement, certain capitalized
terms have the meanings specified or referred to throughout this
Agreement, and the following terms have the meanings specified
or referred to in this Article 1:
"Acquired Companies" means the Company and AFT LLC.
"Affiliate" means, as applied to any Person, (a) any other
Person directly or indirectly controlling, controlled by or under
common control with, that Person, (b) any other Person that owns
or controls ten percent (10%) or more of the equity interests in
that Person or any of its Affiliates, (c) as to a corporation, each
director and officer thereof, (d) as to a limited liability company,
each managing member or similarly authorized person thereof
(including officers), or (e) as to any other entity, each Person
exercising similar authority to those of a director or officer of
a corporation. For the purposes of this definition, "control"
(including with correlative meanings, the terms "controlling,"
"controlled by," and "under common control with") as applied to
any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of that Person, whether through ownership of voting
securities or by contract or otherwise.
"Affiliated Group" means any affiliated group within
the meaning of Code Section 1504(a) or any similar group
defined under a similar provision of state, local, or foreign
Law.
"AFT Business Transfer" means the transfer of
substantially all of the assets and certain liabilities of AFT
from AFT to AFT LLC contemplated by Section 6.8 herein.
"AFT LLC Operating Agreement" means the Operating
Agreement of AFT LLC dated December 8, 2008.
"Code" means the Internal Revenue Code of 1986, as
amended, or any successor law.
"Company Operating Agreement" means the Limited
Liability Company Agreement of the Company dated December
8, 2008.
"Consent" means any approval, consent, ratification,
waiver, or other authorization (including any Governmental
Authorization).
"Contemplated Transactions" means all of the
transactions contemplated by this Agreement and the other
Transaction Documents, including:
(a) the Seller Business Transfer and the AFT
Business Transfer;
(b) the sale of the Purchased Interests by Seller to
Purchaser;
(c) the execution, delivery, and performance of the
Transaction Documents; and
(d) the performance by Purchaser and Seller of their
respective covenants and obligations under this Agreement and
the other Transaction Documents.
"Contingent Payments" means payment of the Contingent
Amounts (as defined in the Contingent Note) and Holdback Amounts
(as defined in the Contingent Note), as applicable.
"Contracts" has the meaning set forth in Section 4.16
of this Purchase Agreement.
"Earnout Payments" shall mean the Contingent Payments
and the Additional Earnout Payments, as applicable.
"EBITDA" means the Company's earnings before interest,
taxes, depreciation and amortization on a consolidated basis.
"Environmental Action" means any complaint, summons,
action, citation, notice, directive, order, claim, litigation,
investigation, request for information, judicial or
administrative proceeding or action, judgment, letter or other
communication from any Person or Governmental Body involving or
alleging violations of Environmental Requirements or Releases or
threatened Releases of Hazardous Substances.
"Environmental Requirements" means any present or future
federal, state or local law, statute, ordinance, rule, regulation,
order, principle of common law, judgment, decree, permit, license
or other binding determination of any governmental authority
applicable to the Facilities and imposing liability or establishing
standards of conduct for protection of the environment (including,
without limitation, natural resources, surface water, groundwater,
soils, and ambient air), pollution control, protection of human
health and safety, or the presence, use, generation, treatment,
storage, disposal, Release, transport or handling of Hazardous
Substances.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, or any successor law, and regulations and
rules issued pursuant to that Act or any successor law.
"Facilities" means any real property, leaseholds, or other
interests currently or formerly owned or operated by any Acquired
Company and any buildings, plants, structures, or equipment
(including motor vehicles and rolling stock) currently or formerly
owned or operated by any Acquired Company.
"▇▇▇▇▇▇▇ Loan" means that certain Loan Agreement, dated as
of the Closing Date, pursuant to which Purchaser loans US $85,000
to Seller in accordance with its terms, in the form attached as
Exhibit B hereto.
"▇▇▇▇▇▇▇ Note" means that certain Promissory Note, dated as
of the Closing Date, made in favor of Purchaser and evidencing the
loan from Purchaser to Seller pursuant to the ▇▇▇▇▇▇▇ Loan.
"GAAP" means United States generally accepted accounting
principles, applied on a consistent basis.
"Governmental Authorization" means any approval, consent,
license, permit, waiver, or other authorization required under the
authority of any Governmental Body or pursuant to any Law.
"Governing Documents" means, with respect to any particular
entity, (a) if a corporation, the articles or certificate of
incorporation and the bylaws, (b) if a limited liability company,
the articles of organization and operating agreement, (c) if another
type of Person, any other charter or similar document adopted or filed
in connection with the creation, formation or organization of the Person,
(d) all equityholders' agreements, voting agreements, voting trust
agreements, joint venture agreements, registration rights agreements or
other agreements or documents relating to the organization, management or
operation of any Person or relating to the rights, duties and obligations
of the equityholders of any Person, and (e) any amendment or supplement
to any of the foregoing.
"Governmental Body" means any:
(a) nation, state, county, city, town, village,
district, or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or
other government;
(c) governmental or quasi-Governmental Body of any
nature (including any governmental agency, branch, department, official,
or entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory,
or taxing authority or power of any nature.
"Guaranty" means the Guaranty attached hereto as Exhibit F,
dated as of the Closing Date, by and between Guarantor and Purchaser.
"Hazardous Substances" means any substance, material, element,
compound, waste or chemical that is defined, listed or otherwise
classified or regulated as a contaminant, pollutant, toxic pollutant,
toxic or hazardous substance, extremely hazardous substance or chemical,
hazardous, special or solid waste under any Environmental Requirement,
including, without limitation, petroleum and its refined products,
polychlorinated biphenyls, radioactive or explosive materials, radon,
and any raw materials, building components (including, without
limitation, asbestos-containing materials) and manufactured products
containing hazardous substances listed or classified as such under
Environmental Requirements.
"▇▇▇▇▇ Employment Agreement" means that certain Employment
Agreement, dated as of June 1, 2005, by and between Seller and ▇▇▇▇▇
▇▇▇▇▇.
"Indebtedness" means (a) any indebtedness for money borrowed or
issued in substitution for or exchange of indebtedness for borrowed
money, (b) any indebtedness evidenced by any note, bond, debenture or
other debt security, (c) any indebtedness for the deferred purchase
price of property or services with respect to which a Person is liable,
contingently or otherwise, as obligor or otherwise (other than trade
payables and other current liabilities incurred in the ordinary course
of business which are not more than thirty days past due), (d) any
commitment by which a Person assures a creditor against loss
(including contingent reimbursement obligations with respect to
letters of credit), (e) any indebtedness guaranteed in any manner by
a Person (including guarantees in the form of an agreement to repurchase
or reimburse), (f) any obligations under capitalized leases with respect
to which a Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or with respect to which obligations a Person
assures a creditor against loss, (g) any indebtedness secured by a Lien
on a Person's assets, (h) any derivatives, and (i) accrued interest to
and including the Closing Date in respect of any of the obligations
described in the foregoing clauses (a) through (h) of this definition
and all premiums, penalties, charges, fees, costs, expenses and other
amounts due in connection with the payment and satisfaction in full of
such obligations.
"Insider" means any officer, executive employee, partner or
Affiliate of any Acquired Company or any individual related to any such
Person.
"IRS" means the United States Internal Revenue Service or any
successor agency, and, to the extent relevant, the United States
Department of the Treasury.
"Law" means any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution,
law, ordinance, principle of common law, regulation, statute, or treaty.
"Lien" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest,
right of first refusal, or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income, or exercise of
any other attribute of ownership.
"Losses" means any and all claims, costs, expenses (including
costs of investigation, attorneys' fees and court costs), judgments,
actions, suits, proceedings, penalties, fines, damages, losses and
liabilities of any kind or nature.
"Material Adverse Effect" means any material adverse effect in
the condition (financial or otherwise), operations, results of
operations, prospects, or assets of Seller, AFT, the Acquired Companies
or the Business.
"Membership Interests" shall mean the "Interests" as defined in
the Company Operating Agreement.
"Nonqualified Stock Options" means the nonqualified stock options
to purchase 100,000 shares of common stock of Purchaser issued to each of
Guarantor and ▇▇▇▇▇ ▇▇▇▇▇ on the Closing Date, in accordance with its
terms and conditions.
"Order" means any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any
court, administrative agency, or other Governmental Body or by any
arbitrator.
"Permitted Liens" means (a) statutory liens for current Taxes or
other governmental charges with respect to the Facilities not yet due and
payable, (b) mechanics, carriers, workers, repairers and similar statutory
liens arising or incurred in the ordinary course of business for amounts
which are not delinquent and which could not, individually or in the
aggregate, have a Material Adverse Effect, (c) zoning, entitlement, building
and other land use regulations of record imposed by Governmental Bodies
having jurisdiction over the Facilities which are not violated by the
current use and operation of the Facilities, (d) covenants, conditions,
restrictions and easements of record and other matters of record affecting
title to the Facilities which do not materially interfere with the use or
occupancy of the Facilities as currently used in the Business, and (e) liens
set forth on Exhibit I attached hereto.
"Person" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization, labor union, or
other entity or Governmental Body.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought, conducted,
or heard by or before, or otherwise involving, any Governmental Body or
arbitrator.
"Proprietary Rights" means all (a) patents, patent applications,
patent disclosures and inventions, (b) trademarks, service marks, trade
dress, trade names, logos, internet domain names and company names and
registrations and applications for registration thereof together with all
of the goodwill associated therewith, (c) copyrights (registered or
unregistered) and copyrightable works and registrations and applications
for registration thereof, (d) mask works and registrations and applications
for registration thereof, (e) computer software (including source code and
executable code), data, data bases and documentation thereof (excluding off-
the-shelf software programs), (f) trade secrets and other confidential
information (including ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice),
know-how, manufacturing and production processes and techniques, research
and development information, drawings, specifications, designs, plans,
proposals, technical data, copyrightable works, financial and marketing
plans and customer and supplier lists and information), (g) other
intellectual property rights, and (h) copies and tangible embodiments
thereof (in whatever form or medium).
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, seeping, migrating,
dumping or disposing of any Hazardous Substance (including the abandonment
or discarding of barrels, containers and other closed receptacles
containing any Hazardous Substance) into the indoor or outdoor
environment.
"Securities Act" means the Securities Act of 1933 or any successor
law, and regulations and rules issued pursuant to that Act or any successor
law.
"Seller Business Transfer" means the transfer of substantially
all of the assets and certain liabilities of Seller from Seller to the
Company contemplated by Section 6.7 herein.
"Seller Disclosure Schedule" means the Disclosure Schedule
delivered by Seller and AFT to Purchaser concurrently with the execution
and delivery of this Agreement.
"Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes
under Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax, fee,
assessment or charge of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not, and any Tax
liability for which a Person is liable as a transferee or successor, as
an indemnitor, guarantor, surety or in a similar capacity under any
contract, or under Treasury Regulation Section 1.1502-6 or any comparable
provisions of state, local or foreign tax Law and including any
obligations to indemnify or otherwise assume or succeed to the tax
liability of any other person.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Transaction Documents" means this Agreement, the Guaranty, the
Contingent Note, the Nonqualified Stock Options and all other agreements,
instruments, certificates and other documents to be entered into or
delivered by any Party in connection with the transactions contemplated
by this Agreement.
ARTICLE 2. SALE AND TRANSFER OF PURCHASED INTERESTS; CLOSING
2.1 Purchased Interests. Upon the terms and subject to the
conditions of this Agreement, at the Closing (as defined herein), Seller
shall sell, transfer and deliver 60% of the Membership Interests (the
"Purchased Interests") to Purchaser, and Purchaser shall purchase the
Purchased Interests from Seller, free and clear of any and all Liens
except the Permitted Liens.
2.2 Purchase Price. Subject to the terms and conditions
set forth in this Agreement, the consideration for the Purchased
Interests (the "Purchase Price") shall consist of:
(a) cash in the amount of U.S. $1,535,000 (the
"Initial Purchase Price"), which shall be paid by Purchaser to Seller
and its designees on the Closing Date by wire transfer of immediately
available funds to the bank account designated in Section 2.4;
(b) cash in the amount of U.S. $50,000 (the
"Hold-Back Amount"), which shall be paid by Purchaser to Seller after
the Closing Date within three (3) business days after the Company and
AFT shall have obtained all Governmental Authorizations set forth in
Section 4.20(b) of the Seller Disclosure Schedule to the extent
necessary for the conduct of the Business (as agreed-to between the
parties).
(c) the Earnout Purchase Price (as defined in
Section 2.3 herein); and
(d) the Nonqualified Stock Options.
2.3 Earnout Purchase Price.
(a) Contingent Note. At Closing, Purchaser shall
grant a contingent promissory note, made in favor of Seller in the
amount of $900,000, and in the form attached as Exhibit C hereto
(the "Contingent Note").
(b) Additional Earnout Payments.
(i) If the Acquired Companies' EBITDA for
their 2009 fiscal years equals or exceeds $2,000,000 (the "EBITDA
Target"), Purchaser shall pay Seller an additional amount equal to
20% of the dollar amount by which actual EBITDA of the Acquired
Companies' 2009 fiscal years exceeds $2,000,000, up to a maximum
additional earnout payment pursuant to this Section 2.3(b)(i) of
$500,000 (the "First Additional Earnout Payment").
(ii) If the Acquired Companies' EBITDA
for their 2010 fiscal years equals or exceeds the EBITDA Target,
Purchaser shall pay Seller an additional amount equal to 20% of
the dollar amount by which actual EBITDA of the Acquired
Companies' 2010 fiscal years exceeds EBITDA Target, up to a
maximum additional earnout payment pursuant to this Section
2.3(b)(ii) of $500,000 (the "Second Additional Earnout
Payment").
(iii) If the Acquired Companies' EBITDA
for their 2011 fiscal years equals or exceeds the EBITDA Target,
Purchaser shall pay Seller an additional amount equal to 20% of
the dollar amount by which actual EBITDA of the Acquired
Companies' 2011 fiscal years exceeds $2,000,000, up to a maximum
additional earnout payment pursuant to this Section 2.3(b)(iii)
of $500,000 (the "Third Additional Earnout Payment").
(iv) If the Acquired Companies' EBITDA for
their 2012 fiscal years equals or exceeds the EBITDA Target,
Purchaser shall pay Seller an additional amount equal to 20% of the
dollar amount by which actual EBITDA of the Acquired Companies' 2012
fiscal years exceeds the EBITDA Target, up to a maximum additional
earnout payment pursuant to this Section 2.3(b)(iv) of $500,000
(the "Fourth Additional Earnout Payment," together with the First
Additional Earnout Payment, the Second Additional Earnout Payment
and the Third Additional Earnout Payment, the "Additional Earnout
Payments"). The amount of the Additional Earnout Payments, if any,
and the amount of the Contingent Payments actually paid pursuant
thereto and this Section 2.3(a) shall constitute the Earnout
Purchase Price.
(c) Determination of EBITDA. EBITDA shall be
determined at the end of each of the Company's fiscal years 2009,
2010, 2011, and 2012, in accordance with the provisions of this
Section 2.3. EBITDA shall be calculated by Purchaser in accordance
with GAAP pursuant to Purchaser's historical practices, consistently
applied in accordance with past practice, which calculation shall be
due no later than 90 days after the end of the fiscal year to which
the calculation of EBITDA relates. Absent manifest error, the
calculation of EBITDA pursuant to this Section 2.3(b) shall not be
subject to challenge or objection by Seller or AFT
(d) Payment of Earnout Purchase Price. Purchaser
shall deliver or cause to be delivered to Seller, by no later than 90
days after the end of the fiscal year to which a Contingent Payment or
Additional Earnout Payment relates, (i) the balance sheet of the
Acquired Companies and the related audited statements of income and
cash flows as at and for the period ending for such fiscal year
(collectively, the "Post-Closing Financial Statements") and (ii) a
calculation certificate setting forth the calculation of EBITDA (and
any Earnout Payment due as a result of such calculation of EBITDA)
for such fiscal year (each a "Calculation Certificate"). Provided
that no Dispute Notice (defined below) is delivered to Purchaser,
Purchaser shall deliver or cause to be delivered to Seller the
Earnout Payment then due and payable within forty-five (45) days
after the date of the Calculation Certificate to which a Contingent
Payment or Additional Earnout Payment relates. In the event a
Dispute Notice is delivered to Purchaser, Purchaser shall deliver
or cause to be delivered to Seller the undisputed portion (if any)
of the Earnout Payment then due and payable within forty-five (45)
days after the date of the Calculation Certificate to which a
Contingent Payment or Additional Earnout Payment
relates.
(e) Dispute Procedures. If Seller should desire to
dispute any Post-Closing Financial Statements or Calculation
Certificate delivered by Purchaser, it shall notify Purchaser of any
disputed items, providing reasonable detail of the nature of the
dispute within thirty (30) following its receipt thereof (the
"Dispute Notice'). The parties shall attempt in good faith to
reconcile such dispute within forty-five (45) days after the
expiration of said thirty (30) day period. If the parties are
unable to agree upon the resolution of such dispute during such time,
the matter shall be submitted to a mutually agreed upon accounting
firm (the "Arbitrating Accountant") and any disputed amounts
shall thereafter be determined by the Arbitrating Accountant. The
determination by the Arbitrating Accountant shall be binding on, and
non-appealable, by Seller and Purchaser. All amounts owing by either
party with respect to any Earnout Payment shall be remitted in full
without demand not later than ten (10) days following the date on
which the determination of the Arbitrating Accountant shall be
rendered. The fees and expenses of the Arbitrating Accountant
incurred in the resolution of such dispute shall be borne by the
parties in such proportion as is appropriate to reflect the relative
benefits received by Seller on the one hand and Purchaser on the
other from the resolution of the dispute. For example, if Seller
challenges the calculation of an Earnout Payment by an amount of
$100,000, but the Arbitrating Accountant determines that Seller
has a valid claim for only $40,000, Seller shall bear 60% of the fees
and expenses of the Arbitrating Accountant and Purchaser shall bear
the other 40% of such fees and expenses.
2.4 Payment of Purchase Price. Purchaser will pay, or
cause to be paid, the Initial Purchase Price, the Hold-Back Amount,
and any Earnout Payments by wire transfer of immediately available
funds to Seller as follows:
A sum equal to $1,416,125 of the Initial Purchase Price,
and all other payments hereunder to:
Huntington Bank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA Routing No. ▇▇▇▇▇▇▇▇▇
Acct. No. 02108939903
Acct. Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
A sum equal to $118,875 to of the Initial Purchase Price to:
▇▇▇▇▇▇ Bank NA
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA Routing No. ▇▇▇▇▇▇▇▇▇
Acct. No. ▇▇▇▇▇▇▇▇▇▇
Acct. Name: Transcapital Partners, LLC
2.5 Setoff of Certain Guaranty Obligations. Purchaser
shall have the right to offset, on a dollar for dollar basis, (i)
any payments made as a result of the Acquired Companies' guaranty
of Indebtedness pursuant to the agreements set forth on Schedule
2.5, and (ii) any payments made by or on behalf of Purchaser or any
Acquired Company in connection with the litigation and proceedings
required to be disclosed on Section 4.8 of the Seller Disclosure
Schedule against any portion of the Initial Purchase Price or any
portion of the Purchase Price to be paid pursuant to Section 2.2(b).
ARTICLE 3. CLOSING
3.1 Closing. Subject to the satisfaction of the
conditions precedent set forth in Articles 7 and 8 herein, the
purchase and sale of the Purchased Interests (the "Closing")
provided for in this Agreement will take place at the offices of
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, commencing at 10:00 a.m. (local time) on December 16, 2008,
or such other date or manner as the Parties may mutually agree
(the "Closing Date"). This Agreement shall be deemed effective as
of 11:59 p.m. (local time) on the Closing Date.
3.2 Deliveries of Seller. At or prior to the Closing,
Seller shall deliver or caused to be delivered to Purchaser each of
the following, in form and substance reasonably satisfactory to
Purchaser:
(a) the Company Operating Agreement, as amended
to reflect, inter alia, Purchaser's purchase of the Purchased
Interests;
(b) the Guaranty, duly executed by Guarantor;
(c) the Nonqualified Stock Options, duly executed
by Guarantor and ▇▇▇▇▇ ▇▇▇▇▇;
(d) a written opinion of counsel to Seller dated
as of the Closing Date and addressed to Purchaser, opining to the
matters set forth on Exhibit D hereto;
(e) the ▇▇▇▇▇▇▇ Loan and the ▇▇▇▇▇▇▇ Note, each
duly executed by Seller;
(f) a promissory note granted to Purchaser by the
Company (the "Refinancing Note"), evidencing the loan by Purchaser to
the Company (the "Refinancing Loan") to refinance the aggregate
balance of the obligations listed on Exhibit E hereto (the
"Refinanced Liabilities");
(g) certificates executed by each of Seller, AFT
and Guarantor as to the accuracy of its respective representations
and warranties as of the date of this Agreement and as of the Closing
in accordance with Section 7.1 and as to its compliance with and
performance of its respective covenants and obligations to be
performed or complied with at or before the Closing in accordance
with Section 7.2;
(h) certificates of the Secretary of each of
Seller and AFT certifying, as complete and accurate as of the
Closing Date, attached copies of the Governing Documents of Seller
and AFT, as applicable, certifying and attaching all requisite
resolutions or actions of Seller's and AFT's board of directors,
as applicable, approving the execution and delivery of this
Agreement and the consummation of the Transaction Documents, and
certifying to the incumbency and signatures of the officers of
Seller and AFT executing this Agreement and any other document
relating to the Transaction Documents;
(i) a certificate in the form set forth in
Section 1.1445-2(b)(3)(iii)(B) of the Treasury Regulations
certifying that Seller is not a "foreign person" within the meaning
of Section 1445 of the Code;
(j) certificates dated as of a date not
earlier than the third business day prior to the Closing as to the
good standing of Seller and AFT executed by the appropriate
officials of the State of Pennsylvania;
(k) a written waiver by ▇▇▇▇ ▇▇▇▇▇▇ with
respect all rights arising under Section 13(c) of the ▇▇▇▇▇
Employment Agreement; and
(l) any other documents or certificates
reasonably requested by Purchaser.
3.3 Deliveries of Purchaser. At or prior to the
Closing, Purchaser shall deliver to Seller each of the following,
in form and substance reasonably satisfactory to Seller:
(a) the Initial Purchase Price in accordance
with Section 2.2(a);
(b) the ▇▇▇▇▇▇▇ Loan, duly executed by
Purchaser, along with the proceeds thereof in available funds;
(c) the Contingent Note, duly executed by
Purchaser;
(d) the Nonqualified Stock Options, duly
executed by Purchaser;
(e) the Refinancing Loan;
(f) a certificate executed by Purchaser as to the
accuracy of its representations and warranties as of the date of this
Agreement and as of the Closing in accordance with Section 8.1 and as
to its compliance with and performance of its covenants and
obligations to be performed or complied with at or before the Closing
in accordance with Section 8.2;
(g) a certificate of the Secretary of Purchaser
certifying, as complete and accurate as of the Closing Date,
attached copies of the Governing Documents of Purchaser, certifying
and attaching all requisite resolutions or actions of Purchaser's
board of directors approving the execution and delivery of this
Agreement and the consummation of the Transaction Documents, and
certifying to the incumbency and signatures of the officers of
Purchaser executing this Agreement and any other document relating
to the Transaction Documents;
and
(h) a counterpart signature page to the
Company Operating Agreement, as amended to reflect, inter alia,
Purchaser's purchase of the Purchased Interests.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SELLER, AFT
AND GUARANTOR
Except as expressly set forth in this Agreement, Seller,
AFT and Guarantor make no representation or warranty, express or
implied, at law or in equity, in respect of Seller, AFT, Guarantor,
any of the Acquired Companies or the Business, and any such other
representations or warranties are hereby expressly disclaimed. As
a material inducement to Purchaser to enter into this Agreement,
each of Seller, AFT and Guarantor, jointly and not severally,
hereby represent and warrant as of the date hereof (except as
otherwise specifically provided herein) that:
4.1 Organization and Good Standing.
(a) Each of Seller and AFT is a corporation
duly organized, validly existing, and in good standing under the
laws of the State of Pennsylvania and has the power and authority
to conduct the Business as it is now being conducted, to own or
use the properties and assets it purports to own or use, and to
perform all of its obligations under the Contracts. As of the
Closing Date, each of Seller and AFT shall be duly qualified to
do business as a foreign corporation and is in good standing under
the laws of each state, country or other jurisdiction in which it
is incorporated and in which either the ownership or use of the
properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except where failure
to qualify would not, individually or in the aggregate, result in a
Material Adverse Effect, which jurisdictions are set forth in
Section 4.1(a) of the Seller Disclosure Schedule.
(b) Each Acquired Company is a limited liability
company duly organized, validly existing, and in good standing under
the laws of the State of Delaware and has the power and authority to
conduct the Business as it is now being conducted, to own or use the
properties and assets Seller and AFT purport to own or use, and to
perform all of the obligations of Seller and AFT under the Contracts
transferred pursuant to the Seller Business Transfer and the AFT
Business Transfer. As of the Closing Date, each Acquired Company
shall be duly qualified to do business as a foreign limited
liability company and shall be in good standing under the laws of
each state, country or other jurisdiction in which it is organized
and in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it,
requires such qualification, except where failure to qualify would
not, individually or in the aggregate, result in a Material Adverse
Effect, which jurisdictions are set forth in Section 4.1(b) of the
Seller Disclosure Schedule.
(c) Seller and AFT have caused to be delivered
to Purchaser correct and complete copies of the Governing Documents
of Seller, AFT, the Company and AFT LLC, which documents reflect all
amendments made thereto. Correct and complete copies of the minute
books containing the records of meetings of the shareholders and
directors of Seller and AFT, and members and managers of each
Acquired Company, have been furnished to Purchaser. Neither,
Seller, AFT or the Acquired Companies are in default under or in
violation of any provision of its Governing Documents.
4.2 Authority of Seller, AFT and Guarantor. Seller,
AFT and Guarantor have full power and authority to execute and
deliver the Transaction Documents and to consummate the
Contemplated Transactions. Seller, AFT and Guarantor have duly
executed and delivered this Agreement and no other action or
proceeding on the part of Seller, AFT or Guarantor is necessary
to approve and authorize the execution and delivery of the
Transaction Documents or the consummation of the Contemplated
Transactions. Upon the execution and delivery by Seller, AFT
and Guarantor of the Transaction Documents, the Transaction
Documents will constitute the legal, valid and binding obligations
of Seller, AFT, and Guarantor, enforceable against it in
accordance with their terms.
4.3 Title to Membership Interests; Capitalization.
(a) Seller is the record and beneficial owner
of 100% of the Membership Interests, free and clear of any liens
except Permitted Liens. At Closing, Seller will be the record and
beneficial owner of approximately 86% of the Membership Interests
(the "Seller Membership Interests"), free and clear of any Liens
except Permitted Liens, and AFT will be the record and beneficial
owner of approximately 14% of the Membership Interests (the "AFT
Membership Interests"), free and clear of any Liens except Permitted
Liens. The Membership Interests are not, and the Seller Membership
Interests and AFT Membership Interests will not be subject to, nor
be issued in violation of, any preemptive rights or rights of first
refusal. The Membership Interests are validly issued, fully paid
and nonassessable and free of any restrictive legends or liens
(except Permitted Liens) except as may be required under the
Securities Act. At Closing, all of the outstanding Seller Membership
Interests and AFT Membership Interests will be, and when purchased by
Purchaser in accordance herewith will be, validly issued, fully paid
and nonassessable and shall be free of any restrictive legends or
Liens (except Permitted Liens) except as may be required by the
Securities Act.
(b) At Closing, the Seller Membership Interests
and AFT Membership Interests will constitute all outstanding equity
interests in the Company. There are no outstanding or authorized
options, warrants, rights (including preemptive rights), contracts,
calls, puts, rights to subscribe, conversion rights or other
agreements or commitments providing for the issuance, disposition
or acquisition of any interests in the Company. There are no
outstanding or authorized equity appreciation, phantom equity or
similar rights with respect to the Company. There are no voting
trusts, proxies or any other agreements or understandings with
respect to the voting of the interests of the Company. The Company
is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any of its equity interests.
4.4 Title to AFT Membership Interest. AFT is the record
and beneficial owner of 100% of the outstanding Membership Interests
in AFT LLC (the "AFT LLC Membership Interests"), free and clear of
any liens except Permitted Liens. At Closing, the Company will be the
sole record and beneficial owner of all of the AFT LLC Membership
Interests, free and clear of any Liens except Permitted Liens. The AFT
LLC Membership Interests are not subject to, nor issued in violation
of, any preemptive rights or rights of first refusal. There are no
outstanding or authorized options, warrants, rights (including
preemptive rights), contracts, calls, puts, rights to subscribe,
conversion rights or other agreements or commitments providing for the
issuance, disposition or acquisition of any interests in AFT LLC.
There are no outstanding or authorized equity appreciation, phantom
equity or similar rights with respect to AFT LLC. There are no voting
trusts, proxies or any other agreements or understandings with respect
to the voting of the AFT LLC Membership Interests. AFT LLC is not
subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its equity interests.
4.5 Subsidiaries and Investments. A list of the
subsidiaries of the Company is provided on Section 4.5 of the Seller
Disclosure Schedule. Except as set forth in Section 4.5 of the Seller
Disclosure Schedule, the Company does not own or hold the right to
acquire any security or interest in any other Person.
4.6 No Violation; Consents. Except as set forth in
Section 4.6 of the Seller Disclosure Schedule, the execution,
delivery and performance by Seller, AFT and Guarantor of this
Agreement, and each other Transaction Document, the consummation of
the Contemplated Transactions, and the fulfillment of and compliance
with the terms and conditions hereof and thereof do not and will not,
with or without the passing of time or the giving of notice, or both:
(a) violate or conflict with any provision of the
Governing Documents of Seller, AFT or the Acquired Companies;
(b) material breach or otherwise constitute or give
rise to a material default under, result in the loss of any benefit
under or permit the acceleration of any obligation under any contract,
commitment or other obligation to or by which Seller, AFT, Guarantor or
any Acquired Company is a party or is bound (which contracts, commitments
or other obligations are material, individually or in the aggregate);
(c) violate in any material respect any statute,
ordinance, Law, rule or regulation or any judgment, Order or decree of
any court or other Governmental Body to which Seller, AFT, Guarantor or
any Acquired Company is subject;
(d) result in a prohibited transaction as defined
in Section 406 of ERISA or Section 4975 of the Code for which there is
no exemption or a breach of fiduciary duty under ERISA; or
(e) require any material Consent, approval, order
or authorization of, notice to, or filing, recording, registration or
qualification with any court or other Governmental Body.
4.7 Financial Statements. Seller and AFT have delivered
to Purchaser (a) the balance sheet of Seller and AFT as of December 31,
2007 (including the notes thereto, the "Fiscal Year-End Balance
Sheet") and the balance sheet of Seller and AFT as of December 31,
2006 (including the notes thereto) and the related unaudited statements
of income, changes in member' equity, and cash flow for each of the
fiscal years then ended (collectively, the "Fiscal Year-End Financial
Statements"); and (b) the balance sheet of Seller and AFT as of June
30, 2008 (including the notes thereto, the "Interim Balance Sheet"),
and the related unaudited statements of income, changes in members'
equity, and cash flow for the six months then ended (collectively,
the "Interim Financial Statements"). The Fiscal Year-End Financial
Statements and the Interim Financial Statements (collectively, the
"Financial Statements") and notes are accurate and complete in all
material respects, are consistent with Seller and AFT's respective
books and records, present fairly in all material respects Seller
and AFT's respective financial condition and results of operations as
of the times and for the periods referred to therein, and have been
prepared all material respects in accordance with GAAP
(b) All projections provided to Purchaser by
Seller and AFT have been prepared in good faith and reflect
performance levels Seller and AFT reasonably believe can be
achieved (specifically excluding from such consideration, however,
any adverse effects relating thereto resulting from or arising with
respect to the conditions generally affecting the U.S. economy and
trucking industry).
4.8 Absence of Undisclosed Liabilities. To Seller's
knowledge, and except as otherwise set forth in Schedule 4.8 of the
Seller Disclosure Schedule, Seller and AFT have no material
obligations or liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known, whether due or to
become due and regardless of when asserted) of the type required to
be reflected in a balance sheet prepared in accordance with GAAP,
except (a) liabilities reflected on the liabilities side of the
Interim Balance Sheet or the Fiscal Year-End Balance Sheet or
footnotes thereto and (b) liabilities that have arisen after the
date of the Interim Balance Sheet in the ordinary course of
business consistent with past practices or otherwise in accordance
with the terms and conditions of this Agreement (none of which is a
liability for breach of contract, breach of warranty, tort or
Infringement or a claim or lawsuit or an environmental liability).
4.9 Books and Records. The books of account, minute
books, membership interest record books, and other records of
Seller, AFT and the Acquired Companies have been made available
to Purchaser and are complete and correct in all material respects.
At the Closing, all of the books and records of the Acquired
Companies will be in the possession of the respective Acquired
Company.
4.10 Absence of Certain Developments. Except as set
forth in Section 4.10 of the Seller Disclosure Schedule, since
June 30, 2008, neither Seller, AFT nor any Acquired Company has:
(a) suffered any change or suffered any theft, damage, destruction
or casualty loss to its assets, whether or not covered by
insurance that has had a Material Adverse Effect; (b) except for
the transfer of assets contemplated by the Seller Business Transfer
and the AFT Business Transfer, sold, assigned, leased or
transferred any of its assets, except in the ordinary course of
business consistent with past practices; (c) except in connection
with the transfer of assets contemplated by the Seller Business
Transfer and the AFT Business Transfer, permitted any of its
shares or the Membership Interests to be sold, redeemed or
transferred; (d) permitted any of its assets, shares or the
Membership Interests to become subject to any lien, security
interest or other encumbrance of any kind or nature; (e) except
in connection with the transfer of assets contemplated by the
Seller Business Transfer and the AFT Business Transfer, issued
additional shares or participated in any merger or plan of share
exchange; (f) entered into, amended, waived any material right
under or terminated any contract, lease, instrument, license or
permit relating to its Business, customers or creditors, or taken
any other action or entered into any other transaction except in
the ordinary course of business consistent with past practices;
(g) hired or terminated any of its employees, except for cause or
in the ordinary course of business; (h) paid, declared or accrued
any bonuses, increases in salaries or compensation for services,
except in the ordinary course of business consistent with past
practices; (i) incurred any Indebtedness or otherwise made any
loans or advances to, or guarantee for the benefit of, or extended
any credit or granted any discounts to, any person or entity;
(j) except for the transfer of assets contemplated by the Seller
Business Transfer and the AFT Business Transfer and matters
pertaining thereto, engaged in any transaction with any related
party, Insider or Affiliate, except in the ordinary course of
business; (k) except for the transfer of assets contemplated by
the Seller Business Transfer and the AFT Business Transfer and
matters pertaining thereto, made any distributions or paid any
dividends with respect to the membership interests of any Acquired
Company or made any other distributions; (l) made or committed to
any capital expenditure which for any individual item represents
an amount greater than $25,000; or (m) committed to do any of the
foregoing.
4.11 Title to Assets.
(a) Seller and AFT have good and marketable
title to, or a valid leasehold interest in, the properties and
assets shown on the Interim Balance Sheet or acquired thereafter,
free and clear of all Liens, except Permitted Liens and the
Refinanced Liabilities, and except for properties and assets
disposed of in the ordinary course of business and consistent with
past practices since the date of the Interim Balance Sheet. To the
knowledge of Seller and AFT, Seller's and AFT's buildings,
equipment and other tangible assets are in good operating
condition (normal wear and tear excepted) and are fit for use in
the ordinary course of business.
(b) Seller and AFT own or lease all buildings,
machinery, equipment, and other tangible assets necessary for the
conduct of the Business as presently conducted.
4.12 Real Property.
(a) The Acquired Companies do not own any real
property and are not parties to any agreement or option to purchase
any real property or interest therein.
(b) Section 4.12(b) of the Seller Disclosure
Schedule sets forth each of the leases or subleases of the
Acquired Companies (each a "Real Property Lease" and, collectively,
the "Real Property Leases") by which the Company, AFT LLC, or any
Acquired Company as lessee, leases real property, including the
right to all security deposits and other amounts and instruments
deposited for or on behalf of the Company, AFT LLC, or any Acquired
Company as applicable, thereunder (collectively, such parcels of
real property are "Leased Real Property"). The Leased Real Property
is in all material respects in an operating condition and state of
repair sufficient for the Acquired Companies to continue to conduct
the Business conducted thereon consistent with past practice. Each
of the Real Property Leases is in full force and effect. Seller
and AFT have delivered to Purchaser true, correct, complete and
accurate copies of each of the Real Property Leases described in
Section 4.12(b) of the Seller Disclosure Schedule. With respect
to each Real Property Lease listed in Section 4.12(b) of the Seller
Disclosure Schedule: (i) the Real Property Lease is legal, valid,
binding, enforceable, in full force and effect, and the applicable
Acquired Company holds a valid and existing leasehold or
subleasehold interest under each such Real Property Lease; (ii) the
Real Property Lease will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following
the Closing and without any increased or additional payment as a
result of the transactions contemplated by this Agreement; (iii) no
Acquired Company or any other party to the Real Property Lease is
in material breach or default and, to Seller's knowledge, no event
has occurred which, with notice or lapse of time or both, would
constitute such a material breach or default or permit termination,
modification or acceleration under the Real Property Lease; (iv) the
Acquired Companies have not, and, to the knowledge of Seller or AFT,
no other party has, repudiated any provision thereof; (v) the
Acquired Companies have not, and, to the knowledge of Seller or AFT,
no other party has, initiated any disputes or forbearance programs
with respect to the Real Property Lease; (vi) no security deposit or
portion thereof deposited with respect to such Real Property Lease
has, to Seller's knowledge, been applied in respect of a breach or
default under such Real Property Lease which has not been re-
deposited in full; and (vii) the Acquired Companies have not
assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in the Real Property Lease.
4.13 Accounts Receivable. Except as set forth in
Section 4.13 of the Seller Disclosure Schedule, all accounts
receivable of Seller and AFT that are reflected on the Fiscal
Year-End Balance Sheet or the Interim Balance Sheet or on the
accounting records of the Acquired Companies as of the Closing
Date (collectively, the "Accounts Receivable"), which Accounts
Receivable shall be transferred to the Company pursuant to the
Seller Business Transfer and the AFT Business Transfer,
represent or will represent, as applicable, valid obligations
arising from sales actually made or services actually performed
in the ordinary course of business. Except as set forth in
Section 4.13 of the Seller Disclosure Schedule, and unless paid
prior to the Closing Date, the Accounts Receivable are or will be
as of the Closing Date current and collectible net of the
respective reserves shown on the Fiscal Year-End Balance Sheet or
the Interim Balance Sheet or on the accounting records of the
Acquired Companies as of the Closing Date. To Seller's knowledge,
there is no contest, claim, or right of set-off, other than returns
in the ordinary course of business, under any contract with any
obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable.
4.14 Inventory. [Intentionally Omitted]
4.15 Taxes.
(a) Seller, AFT, and the Acquired Companies have
each filed all Tax Returns that are or were required to be filed by
them. All such Tax Returns were correct and complete in all material
respects. All Taxes due and owing by the Acquired Companies, Seller
or AFT (whether or not shown on any Tax Return) have been paid. The
Company currently is not the beneficiary of any extension of time
within which to file any Tax Return. There are no Liens for Taxes
(other than Permitted Liens) upon any of the assets of the Company.
(b) There is no dispute or claim concerning any
Tax liability of the Acquired Companies, Seller or AFT either (i)
claimed or raised by any authority in writing or (ii) as to which
Seller, AFT or any Acquired Company has knowledge.
(c) Section 4.15(c) of the Seller Disclosure
Schedule lists all federal, state, local, and foreign Tax Returns
filed with respect to the Acquired Entities, Seller and AFT for
taxable periods ended on or after December 31, 2001 that have been
audited, and indicates those Tax Returns that currently are the
subject of audit. Seller and AFT have delivered to Purchaser
correct and complete copies of all Tax Returns, examination
reports, and statements of deficiencies assessed against, or
agreed to by Seller, AFT or the Acquired Entities. None of the
Acquired Entities, Seller or AFT has (i) waived any statute of
limitations in respect of Taxes or (ii) agreed to any extension
of time with respect to a Tax Return, Tax assessment or Tax
deficiency.
(d) None of Acquired Company, Seller or AFT
is a party to any agreement, contract, arrangement, or plan that
has resulted or would result, separately or in the aggregate, in
the payment of any "excess parachute payment" within the meaning
of Code Section 280G (or any corresponding provision of state,
local, or foreign Tax Law). None of Acquired Company, Seller or
AFT is a United States real property holding corporation within
the meaning of Code Section 897(c)(2) during the applicable period
specified in Code Section 897(c)(1)(A)(ii). None of the Acquired
Companies, Seller or AFT is a party to or bound by any tax
allocation or sharing agreement. None of the Acquired Companies,
AFT or Seller (i) has been a member of an Affiliated Group filing
a consolidated federal income Tax Return (other than a group the
common parent of which was the Company) or (ii) has any liability
for the Taxes of any Person (other than such Acquired Company)
under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign Law), as a transferee or
successor, by contract, or otherwise.
(e) The unpaid Taxes of the Acquired
Companies, AFT and Seller (i) did not, as of the most recent
fiscal Period end, materially exceed the provision for Tax
liability set forth on the face of the balance sheet provided
Buyer covering such period (rather than in any notes thereto)
and (ii) will not materially exceed that provision for Tax
liability as adjusted for operations and transactions through
the Closing Date in accordance with the past custom and practice
of the Acquired Companies, Seller and AFT in filing its Tax Returns.
(f) No Acquired Company will be required to
include any item of income in, or exclude any item of deduction
from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of any: (i) change in
method of accounting for a taxable period ending on or prior to
the Closing Date; (ii) "closing agreement" as described in Code
Section 7121 (or any corresponding or similar provision of state,
local or foreign Tax Law) executed on or prior to the Closing
Date; (iii) intercompany transactions or any excess loss account
described in Treasury Regulations under Code Section 1502 (or any
corresponding or similar provision of state, local or foreign Tax
Law); (iv) installment sale or open transaction disposition made
on or prior to the Closing Date; or (v) prepaid amount received
on or prior to the Closing Date.
(g) No Acquired Company has paid, directly or
indirectly, separately or in the aggregate, a fee of $50,000 or
more to an advisor who has placed a limitation on disclosure of
the "tax treatment" or "tax structure" (as such terms are defined
in Treasury Regulation Section 1.6011-4(c)) of any transactions
described in or contemplated by this Agreement where such
Limitation on disclosure protects the confidentiality of that
advisor's tax strategies.
4.16 Contracts and Commitments.
(a) Section 4.16(a) of the Seller Disclosure
Schedule sets forth a correct and complete list of each of the
following to which any Acquired Company is a party or by which
it or its assets or the Business is bound or affected, whether
written or oral (collectively, the "Contracts"): (i) collective
bargaining agreements or contracts with any labor union or any
bonus, pension, profit sharing, retirement or any other form of
deferred compensation plan; (ii) contracts relating to employment,
confidentiality, non-competition and/or Proprietary Rights, and
any agreement providing for severance or change of control
benefits; (iii) agreements, indentures or other arrangements
relating to Indebtedness or to mortgaging, pledging or otherwise
placing a Lien on any of its assets; (iv) contracts under which
such entity has advanced or loaned any other Person amounts in the
aggregate exceeding $20,000; (v) contract relating to lending or
investing of funds; (vi) licenses or royalty agreements; (vii)
guarantees of any obligation, other than endorsements made for
collection; (viii) management, consulting, advertising, marketing,
promotion, technical services, advisory or other similar contracts
or arrangements relating to the Business; (ix) agreements with any
customer or material supplier; (x) leases or agreements under which
it is lessee of, or holds or operates, any personal property owned
by any other party calling for payments in excess of $20,000
annually; (xi) leases or agreements under which it is lessor of or
permits any third party to hold or operate any property, real or
personal, owned or controlled by it; (xii) contracts or group of
related contracts with the same party continuing over a period of
more than six (6) months from the date or dates thereof, not
terminable by it on thirty (30) days or less notice without
penalties, or involving more than $20,000; (xiii) contracts which
prohibit any Acquired Company or any of its officers or employees
from freely engaging in business anywhere in the world; (xiv)
agreements under which the consent of any Person or Governmental
Authority is required as a result of the transactions contemplated
by any of the Transaction Documents; (xv) joint venture agreements
or agreements relating to the acquisition or sale of any company,
business, division or other enterprise, whether in the form of
stock purchase, asset acquisition or otherwise; (xvi) agreements,
contracts or commitments for the purchase or sale of any goods or
services at rates or terms which are materially different from
generally available rates or terms, including purchase or sale
commitments entered into in settlement of claims or prior
obligations; or (xvii) agreements material to any Acquired
Company whether or not entered into in the ordinary course.
(b) Each contract, agreement or commitment
required to be disclosed in Section 4.16(a) of the Seller
Disclosure Schedule was entered into in the ordinary course of
business consistent with past practices, is in full force and
effect, is valid and enforceable in accordance with its terms,
and constitutes a legal and binding obligation of the Acquired
Companies, and to the knowledge of Seller or AFT, each other
party thereto. The Acquired Companies have neither given nor
received, and, to the knowledge of Seller or AFT, no fact or
circumstance exists which could reasonably be expected to give
rise to, with the passage of time or the giving of notice or
both, any material breach, notice of material default,
termination or partial termination under any contract,
agreement or commitment required to be disclosed in Section
4.16(a) of the Seller Disclosure Schedule, and there is no
existing or continuing default by any Acquired Company or, to
the knowledge of Seller or AFT, any other party in the
performance or payment of any obligation under any such
contract, agreement or commitment which could reasonably be
expected to cause a Material Adverse Effect, and each
Acquired Company is in compliance in all material respects
with the provisions of each such contract, agreement or
commitment. Seller and AFT have no knowledge of any
anticipated breach or expectation or intention on the part
of any party to not fully perform any obligation under any
such contract, agreement or commitment.
(c) Except as set forth on Section
4.16(c) of the Seller Disclosure Schedule, Seller and AFT
have provided Purchaser with true and correct copies of all
written contracts which are required to be disclosed in
Section 4.16(a) of the Seller Disclosure Schedule, in each
case together with all amendments, waivers or other changes
thereto (all of which are disclosed in Section 4.16(a) of the
Seller Disclosure Schedule). Section 4.16(c) of the Seller
Disclosure Schedule also contains an accurate and complete
description of all material terms of any oral contracts
referred to therein.
(d) Except as set forth in Section 4.16(d)
of the Seller Disclosure Schedule, Seller or AFT have no
knowledge of any circumstances that may reasonably be expected
to give rise to, any material contract otherwise required to
be disclosed in Section 4.16(a) that relates to the Business
of, or any of the assets owed or used by, any Acquired Company.
4.17 Proprietary Rights.
(a) Section 4.17(a) of the Seller
Disclosure Schedule contains a complete and accurate list of all
(i) patented or registered Proprietary Rights owned or used by any
Acquired Company; (ii) pending patent applications and applications
for registrations of other Proprietary Rights filed by any
Acquired Company; (iii) material unregistered trade names,
internet domain names and company names owned or used by any
Acquired Company; and (iv) material unregistered trademarks,
service marks, and computer software owned or used by any Acquired
Company. Section 4.17(a) of the Seller Disclosure Schedule also
contains a complete and accurate list of all licenses and other
rights granted by any Acquired Company to any third party with
respect to any Proprietary Rights and all licenses and other rights
granted by any third party to any Acquired Company with respect to
any Proprietary Rights, in each case identifying the subject
Proprietary Rights. Each Acquired Company owns, free of all Liens
(except Permitted Liens), all right, title and interest to, or has
the right to use pursuant to a valid written license or otherwise,
all Proprietary Rights necessary for the operation of the Business,
and such rights will be owned or made available for use by Purchaser
after the Closing on terms and conditions identical to those under
which it owned or used such rights prior to the Closing.
(b) Except as otherwise set forth in Section
4.17(b) of the Seller Disclosure Schedule:
(i) No Acquired Company has granted any license or made
any assignment of any of its Proprietary Rights, and no Person
other than such Acquired Company has any right to use any such
owned Proprietary Rights.
(ii) No Acquired Company pays any royalties or other
consideration for the right to use any Proprietary Rights of
others.
(iii) No methods, processes, procedures, apparatus or
equipment, used or held for use by the Acquired Companies, use
or include any proprietary or confidential information or any
trade secrets misappropriated from another Person.
(iv) To the knowledge of Seller or AFT, the Acquired
Companies have no proprietary or confidential information that is
owned or claimed by third parties and that is not rightfully in
the possession of the Acquired Companies, and the Acquired
Companies have complied in all material respects with all
contracts governing the disclosure and use of proprietary or
confidential information.
(c) All statements contained in all
applications prepared by the Acquired Companies for the
registration of its Proprietary Rights were, are and will be,
as the case may be, true, correct and complete in all material
respects.
(d) No Acquired Company has materially
interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Proprietary Rights of any third
parties, and, to the knowledge of the Acquired Companies, Seller
or AFT, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any
Proprietary Rights of the Acquired Companies.
(e) No Acquired Company is in breach, in any
material respect, of any agreement or arrangement under which it
acquired a claim in any Proprietary Rights.
4.18 Litigation; Proceedings. Except as set forth in
Section 4.18 of the Seller Disclosure Schedule, (i) there are no
actions, suits, complaints, charges, proceedings, orders, claims
which to Seller or AFT have received written notice of pending or,
to the knowledge of Seller or AFT, threatened against any Acquired
Company or, in connection with the Business, any of its Affiliates
at law or in equity, or before or by any Governmental Body
(including any actions, suits, complaints, charges, proceedings
with respect to the transactions contemplated by this Agreement)
which could reasonably be expected to cause a Material Adverse
Effect; nor have there been any such actions, suits, proceedings,
orders or claims pending against any Acquired Company or any of
its Affiliates during the past three years; (ii) no Acquired
Company or, in connection with the Business, any of its Affiliates
is subject to any grievance arbitration or other proceedings;
(iii) no Acquired Company or any of its Affiliates is subject to
any judgment, order or decree of any court or other Governmental
Body (or settlement enforceable therein the terms of which have
not been satisfied in full); (iv) there are no investigations by
any Governmental Body pending or, to Seller's knowledge,
threatened against any Acquired Company or, in connection with
the Business, any of its Affiliates at law or in equity, nor has
there been any such investigation during the past three years;
and (v) no Acquired Company has received any opinion or
memorandum or legal advice from legal counsel to the effect
that it is exposed to any liability which may be material to the
Company.
4.19 Brokerage. Except as set forth in Section 4.19
of the Seller Disclosure Schedule, there are no claims for
brokerage commissions, finders' fees or similar compensation in
connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of
Seller, AFT or the Acquired Companies.
4.20 Governmental Authorizations. Section 4.20(a) of
the Seller Disclosure Schedule contains a complete listing of all
material Governmental Authorizations owned or possessed, as of the
date of this Agreement and immediately prior to the Seller Business
Transfer and the AFT Business Transfer, by each of Seller and AFT
and their respective employees or used by Seller and AFT and their
respective employees in the conduct of the Business. Except where
the failure to maintain such could not reasonably be expected to
cause a Material Adverse Effect, and except the Governmental
Authorization set forth on Schedule 4.20(b), each Acquired Company
or its employees, as the case may be, will own or possess as of the
Closing Date all Governmental Authorizations that are necessary to
conduct the Business, including all material Governmental
Authorizations required under any Law. Each of Seller and AFT and
their respective employees (as applicable) are in compliance in all
material respects with the terms and conditions of all material
Governmental Authorizations held by it and have received no written
notices in the past three years that it is in violation of any of
the terms or conditions of such Governmental Authorizations. Each
of Seller and AFT or their respective employees (as applicable)
has taken all necessary action to maintain such Governmental
Authorizations. No loss or expiration of any such Governmental
Authorizations is pending or, to Seller's knowledge, threatened,
other than expiration in accordance with the terms thereof.
Other than normal and customary filing and processing fees, no
payments will be required to be made in connection with any
Governmental Authorizations as a result of the Contemplated
Transactions.
4.21 Employees. Section 4.21 of the Seller
Disclosure Schedule sets forth a complete and accurate list
of all employees or independent contractors of the Acquired
Companies who perform services in connection with the Business,
including their names, positions, salaries or rates of pay
(including bonuses) during the twelve (12) months preceding the
Closing Date and the status of each such Person as active, on
leave, full-time, part-time or otherwise. With respect to the
Business during the two (2) years preceding the Closing Date:
(i) there is no collective bargaining agreement or relationship
with any labor organization; (ii) no executive employee (A) has
given any Acquired Company notice of resignation or intention to
terminate such employee's employment or, to the knowledge of the
Acquired Companies, Seller or AFT, intends or has expressed an
intention or desire to do so; or (B) to the knowledge of the
Company, Seller or AFT, is a party to any confidentiality, non-
competition, proprietary rights or other similar agreement that
would be material to the performance of such employee's employment
duties or the ability of any Acquired Company to conduct the
Business; (iii) to the knowledge of the Acquired Companies, Seller
or AFT, no labor organization or group of employees has filed any
representation petition or made any written or oral demand for
recognition; (iv) to the knowledge of the Acquired Companies,
Seller or AFT, no union organizing efforts are underway or
threatened and no other question concerning representation (or
foreign equivalent) exists; (v) no labor strike, work stoppage,
slowdown, or other material labor dispute has occurred, and none
is underway or, to the knowledge of any Acquired Company, Seller
or AFT, threatened; (vi) to the knowledge of the Acquired
Companies, Seller or AFT, there is no significant ▇▇▇▇▇▇▇'▇
compensation liability, change in experience rating or pending
matter; (vii) there is no material employment-related charge,
complaint, grievance, inquiry or obligation of any kind, pending
or, to the knowledge of any Acquired Company, Seller or AFT,
threatened, in any forum, relating to an alleged violation or
breach by any Acquired Company (or its officers or managers) of
any Law or contract; and (viii) to the knowledge of any Acquired
Company, Seller or AFT, no employee or agent of any Acquired
Company has committed any act or omission giving rise to material
liability for any violation or breach identified in subsection
(vii) above. Each Acquired Company has complied with, and is in
compliance with, in all material respects, all applicable Laws
relating to the employment of personnel and labor, including all
Laws relating to worker health and safety requirements.
4.22 Employee Benefit Matters. At all time during the
two (2) years preceding the Closing Date:
(a) Except as set forth in Section 4.22(a) of
the Seller Disclosure Schedule, with respect to current or former
employees of each Acquired Company, neither Seller, AFT, nor any
Acquired Company maintains or contributes to or has actual or
potential liability with respect to any "employee benefit plan"
(as defined in Section 3(3) of ERISA), or any other employee
benefit plan, program, policy, arrangement or agreement, including
stock option, stock purchase, and welfare and fringe benefit plans.
Each item listed in Section 4.22(a) of the Seller Disclosure
Schedule is referred to herein as a "Plan" and, collectively, as
the "Plans."
(b) Except as set forth in Section 4.22(b) of
the Seller Disclosure Schedule, neither, Seller, AFT nor any
Acquired Company or ERISA Affiliate has ever contributed to any
"multiemployer pension plan" (as defined in Section 3(37) of
ERISA), and no Acquired Company or any ERISA Affiliate has ever
maintained or contributed to any "defined benefit plan" (as
defined in Section 3(35) of ERISA). No Acquired Company or any
ERISA Affiliate maintains or contributes to any Plan which provides
health, accident, life insurance or other welfare-type benefits to
former employees, their spouses or dependents, other than the
health continuation coverage that may be required by Section 4980B
of the Code ("COBRA").
" (c) The Plans (and related trusts and insurance
contracts) have been maintained, funded and administered in
accordance with their terms and the requirements of applicable
Laws, including ERISA and the Code. All material contributions,
premiums or payments which are due on or before the Closing Date
(including, without limitation, as a result of the transactions
contemplated by this Agreement) under each Plan have been paid.
Each Plan which is intended to be qualified under Section 401(a)
of the Code (i) has received a determination from the Internal
Revenue Service that such Plan is so qualified, and nothing has
occurred since the date of such determination that could
adversely affect the qualified status of such Plan; (ii) has been
amended on a timely basis to comply with the tax legislation
commonly referred to as "GUST" and "EGTRRA," and all regulations;
and (iii) has been submitted timely to the Internal Revenue
ervice for an updated favorable determination letter which
considers the terms of such Plan as amended.
(d) All required reports and descriptions
(including Form 5500 annual reports, summary annual reports and
summary plan descriptions) with respect to the Plans have been
properly and timely filed in all material respects with the
appropriate Governmental Body and distributed to participants as
required. Each Acquired Company and ERISA Affiliate has
materially complied with the requirements of COBRA.
(e) With respect to each Plan, (i) there
have been no prohibited transactions as defined in Section 406
of ERISA or Section 4975 of the Code; (ii) no fiduciary (as
defined in Section 3(21) of ERISA) has any liability for breach
of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets
of such Plans; and (iii) no actions, investigations, suits or
claims with respect to the assets thereof (other than routine
claims for benefits) are pending or threatened, and no Acquired
Company, Seller or AFT knows of any facts which would give rise
to or could reasonably be expected to give rise to any such
actions, suits or claims.
(f) With respect to each of the Plans, each
Acquired Company, Seller and AFT have made available to Purchaser
true and complete copies of (i) the plan documents, summary plan
descriptions and summaries of material modifications and other
material employee communications; (ii) the Form 5500 annual
report (including all schedules and other attachments for the
most recent three years); (iii) all related trust agreements,
insurance contracts or other funding agreements which implement
such plans; and (iv) all other material documents pursuant to
which the Plans are maintained, funded and administered.
(g) Neither Seller, AFT nor any Acquired
Company or ERISA Affiliate has incurred or has any reason to
expect that it will incur any material liability to the
Pension Benefit Guaranty Corporation (other than routine
premium payments) or otherwise under Title IV of ERISA
(including any withdrawal liability) or under the Code with
respect to any employee pension benefit plan (as defined in
Section 3(2) of ERISA) that any Acquired Company or ERISA
Affiliate maintains or ever has maintained or to which any of
them contributes, ever has contributed, or ever has been
required to contribute.
4.23 Insurance. Section 4.23 of the Seller
Disclosure Schedule lists each insurance policy maintained
by Seller, AFT or the Acquired Companies with respect to
its properties, assets or the Business, together with a
claims history for the past three years. All of such
insurance policies are in full force and effect, and neither
Seller, AFT nor any Acquired Company is in material default
with respect to its obligations under any such insurance
policies. Neither Seller, AFT nor any Acquired Company has
been denied insurance coverage within the past three years.
The insurance coverage of each of Seller, AFT and the
Acquired Companies is sufficient to comply with any minimum
insurance requirements set forth in any agreement to which
such Seller, AFT or Acquired Company is a party, except
where the failure to maintain such limits could not
reasonably be expected to have a Material Adverse Effect.
Except as set forth on Section 4.23 of the Seller Disclosure
Schedule, neither Seller, AFT nor any the Acquired Company
has any self-insurance or co-insurance programs. To the
knowledge of Seller and AFT, and except as otherwise
disclosed in Section 4.23 of the Seller Disclosure Schedule,
no material state of facts exists with respect to which
Seller, AFT or the Acquired Companies would reasonably
expect to file any insurance claim outside the ordinary
course of its business consistent with the past practices
of Seller, AFT or the Acquired Companies.
4.24 Officers and Managers; Bank Accounts.
Section 4.24 of the Seller Disclosure Schedule lists all
officers and managers of Seller, AFT and each Acquired
Company, and all bank accounts, safety deposit boxes and
lock boxes (designating each authorized signatory with
respect thereto) for Seller, AFT and each Acquired Company.
4.25 Affiliate and Related Party Transactions.
Except as set forth in Section 4.25 of the Seller Disclosure
Schedule, there is no Indebtedness owed to any Acquired
Company by Seller, AFT, any Affiliate of Seller or AFT, or
Insider, or by any Acquired Company to Seller, AFT, any
Affiliate of Seller or AFT, or Insider. Except for
employment arrangements made in the ordinary course of
business or as otherwise set forth on Section 4.25 of the
Seller Disclosure Schedule, neither Seller, any Affiliate
of Seller or AFT, nor any Insider is a party to any
agreement, contract, commitment, arrangement or transaction
with any Acquired Company or any of its Affiliates which
pertains to the Business or has any interest in any
property, real or personal or mixed, tangible or
intangible, used in or pertaining to the Business.
4.26 Compliance with Laws. Seller, AFT and
each Acquired Company has complied with, and is in
compliance with, in all material respects, all Laws which
are applicable to the Business. Seller, AFT and the
Acquired Companies have not received any written, or to the
knowledge Seller or AFT, oral notice of any violations of
any Laws from any Governmental Body within the past three
years.
4.27 Environmental Matters. Seller, AFT and each
Acquired Company is and has been in compliance in all material
respects with all Environmental Requirements. To the knowledge
of Seller or AFT, there has been no material Release at any of
the Leased Real Property, or at any disposal or treatment
facility which received Hazardous Substances generated by or
from Seller, AFT or any Acquired Company or the operation of
the Business at the Leased Real Property. No Environmental
Action has been asserted or is pending against or, to the
knowledge of Seller or AFT, is threatened against Seller, AFT
or any Acquired Company or the Business. The Leased Real
Property has not been used by Seller, AFT or any Acquired
Company as a treatment or disposal site for any Hazardous
Substances during the period of its operation thereof.
Seller, AFT and each Acquired Company has timely prepared,
submitted and made all material filings, reports, plans and
notifications required under any Environmental Requirements
and has maintained all material records and data required by
any Environmental Requirements. Seller, AFT and each
Acquired Company holds all Governmental Authorizations under
any Environmental Requirements in connection with the
operation of the Business. Except as set forth in forth in
Section 4.27 of the Seller Disclosure Schedule, with respect
to Seller, AFT, the Acquired Companies and the Leased Real
Property, Seller and AFT have no knowledge, and Seller and
AFT have not received any notification pursuant to any
Environmental Requirements, that (a) any work, repairs,
corrective or remedial action, construction or capital
expenditures are required to be made as a condition of
continued compliance with any Environmental Requirements or
any Governmental Authorization or approval issued pursuant
thereto; (b) any Governmental Authorization is about to be
renewed, reviewed, made subject to limitations or conditions,
revoked, withdrawn or terminated; or (c) any events,
conditions, circumstances, activities, practices, incidents,
actions or omissions may interfere with or prevent
compliance or continued compliance by Seller, AFT, and the
Acquired Companies, as applicable, with any Environmental
Requirements. Seller and AFT have previously delivered to
Purchaser a copy of all reports, assessments,
investigations, Governmental Authorizations, correspondence
and other documents and information whatsoever which relate
to the compliance status of Seller, AFT and the Acquired
Companies, the operation of the Business or the Leased Real
Property under any Environmental Requirements and which
are in Seller's, AFT's or the Acquired Companies'
possession.
4.28 Customers and Suppliers.
(a) Section 4.28(a) of the Seller
Disclosure Schedule lists each customer that accounted for
5% or more of the total sales of Seller, AFT and any Acquired
Company, and each supplier from which Seller or AFT purchased
$50,000 or more of supplies, in each case during the 2007
fiscal year or during the 2008 fiscal year to date. Neither
Seller, AFT nor any Acquired Company or any of their respective
Affiliates have received any notice, written or otherwise, from
any customers or suppliers required to be disclosed in Section
4.28(a) of the Seller Disclosure Schedule to the effect that
such customers or suppliers shall stop or materially decrease
the rate of buying products or services of, or selling products
or services to, Seller, AFT or any Acquired Company or the
Business (whether as a result of the consummation of the
transactions contemplated hereby or otherwise), and neither
Seller, AFT nor any Acquired Company or any of its Affiliates
have any reasonable belief or expectation that such customers
or suppliers will or intend to do so (specifically excluding
from such consideration, however, any adverse effects relating
thereto resulting from or arising with respect to the conditions
generally affecting the U.S. economy and trucking industry).
(b) Section 4.28(b) of the Seller
Disclosure Schedule sets forth each customer (or former
customer) of Seller, AFT and each Acquired Company that (a)
in the past two fiscal years, ceased buying (or decreased the
rate of buying below $100,000 annually) services of Seller or
AFT, as the case may be; and (b) prior to such cessation of or
decrease in buying, accounted for $100,000 or more in annual
revenue to Seller or AFT, as the case may be.
4.29 Solvency.
(a) After the consummation of the Contemplated
Transactions, including Seller's receipt of the Initial
Purchase Price, Seller and AFT will not be insolvent. As used
in this section, "insolvent" means that the sum of the debts
and other probable liabilities of Seller and AFT exceeds the
present fair saleable value of Seller's assets.
(b) Immediately after giving effect to the
consummation of the Contemplated Transactions: (i) Seller and
AFT will be able to pay its liabilities as they become due in
the usual course of its business; (ii) Seller and AFT will not
have unreasonably small capital with which to conduct its
present or proposed business; (iii) Seller and AFT will have
assets (calculated at fair market value) that exceed its
liabilities; and (iv) taking into account all pending and
threatened (to the knowledge of Seller or AFT) litigation,
final judgments against Seller or AFT in actions for money
damages are not reasonably anticipated to be rendered at a
time when, or in amounts such that, Seller and AFT will be
unable to satisfy any such judgments promptly in accordance
with their terms (taking into account the maximum probable
amount of such judgments in any such actions and the earliest
reasonable time at which such judgments might be rendered) as
well as all other obligations of Seller or AFT. The cash
available to Seller and AFT, after taking into account all
other anticipated uses of the cash, will be sufficient to pay
all such debts and judgments promptly in accordance with their
terms.
4.30 Disclosure.
(a) No representation or warranty of
Seller, AFT or Guarantor in this Agreement and no
information contained in the Seller Disclosure Schedule omits
to state a material fact necessary to make the statements
herein or therein, in light of the circumstances in which
they were made, not misleading.
(b) No notice given pursuant to Section
6.5 will contain any untrue statement or omit to state a
material fact necessary to make the statements therein or in
this Agreement, in light of the circumstances in which they
were made, not misleading.
(c) There is no fact known to Seller, AFT
or Guarantor that has specific application to Seller, AFT or
any Acquired Company (other than general economic or industry
conditions) and that will result in a Material Adverse Effect,
or, as far as Seller, AFT or Guarantor can reasonably foresee
(other than general economic or industry conditions),
materially threatens, the assets, business, prospects, financial
condition, or results of operations of Seller, AFT or the
Acquired Companies (on a consolidated basis) that has not been
set forth in this Agreement or the Seller Disclosure Schedule.
(d) Seller shall promptly disclose to
Purchaser any information contained in the representations and
warranties and Disclosure Schedules delivered pursuant hereto
which, because of an event occurring or knowledge arising after
the date hereof, is incomplete or is no longer correct as of all
times after the date hereof until the Closing; provided,
however, that none of such disclosures shall be deemed to
modify, amend or supplement the representations and warranties
of Seller, AFT or the Acquired Companies contained herein or in
any other agreement, document or instrument for any purpose,
unless Purchaser shall have consented thereto in writing; and
provided further, that except upon the occurrence of any
intentional misrepresentation or fraud on the part of Seller,
AFT or any Acquired Company with respect to any modified,
amended or supplemented representations and warranties,
Purchaser's sole remedy in lieu of consenting thereto shall
be to terminate this Agreement.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as expressly set forth in this Agreement,
Purchaser makes no representation or warranty, express or
implied, at law or in equity, in respect of Purchaser or the
business and operations of Purchaser, and any such other
representations or warranties are hereby expressly disclaimed.
As a material inducement to Seller to enter into this Agreement,
Purchaser hereby represents and warrants that:
5.1 Organization; Power and Authority. Purchaser is
a corporation duly organized, validly existing and in good
standing under the laws of the State of Indiana. Purchaser
possesses all requisite corporate power and authority to execute
and deliver the Transaction Documents to which it is a party and
to consummate the Contemplated Transactions. Purchaser has duly
approved the Transaction Documents to which it is a party and
has duly authorized the execution and delivery of such
Transaction Documents and the consummation of the Contemplated
Transactions. No other action or proceeding on the part of
Purchaser is necessary to approve and authorize the execution
and delivery of the Transaction Documents to which Purchaser is
a party or the consummation of the Contemplated Transactions.
Upon the execution and delivery by Purchaser of the Transaction
Documents, the Transaction Documents will constitute the legal,
valid and binding obligations of Purchaser, enforceable against
it in accordance with their terms.
5.2 No Violation; Consents. The execution, delivery
and performance by Purchaser of this Agreement, and each other
Transaction Document, the consummation of the Contemplated
Transactions, and the fulfillment of and compliance with the
terms and conditions hereof and thereof do not and will not,
with or without the passing of time or the giving of notice,
or both:
(a) violate or conflict with any
provision of the certificate of the Governing Documents of
Purchaser;
(b) breach or otherwise constitute or
give rise to a default under, result in the loss of any benefit
under or permit the acceleration of any obligation under any
contract, commitment or other obligation to or by which Purchaser
is a party or is bound (which contracts, commitments or other
obligations are material, individually or in the aggregate);
(c) violate any statute, ordinance, Law,
rule or regulation or any judgment, Order or decree of any court
or other Governmental Body to which Purchaser is subject; or
(d) require any Consent, approval, order or
authorization of, notice to, or filing, recording, registration
or qualification with any Person, entity, court or other
Governmental Body.
5.3 Brokerage. Purchaser has no liability or
obligation to pay any fees or commissions to any broker, finder
or agent with respect to the transactions contemplated by this
Agreement for which Seller or any of the Acquired Companies
could become liable or obligated.
5.4 Litigation. .There is no proceeding,
litigation, or governmental investigation pending or
threatened affecting Purchaser's right to enter into this
Agreement or to perform its obligations hereunder, nor does
Purchaser know of any ground for such litigation, proceeding
or other investigation.
5.5 Availability of Funds. As of the Closing
Purchaser shall have sufficient funds available to meet its
obligations under the Promissory Note, to refinance the
Refinanced Liabilities, and to perform its obligations pursuant
to this Agreement in accordance with the terms and conditions
contained herein.
ARTICLE 6. COVENANTS OF THE PARTIES
6.1 Access and Investigation.
(a) Between the date of this Agreement and
the Closing Date, Seller and AFT will, and will cause each
Acquired Company and its representatives to, (a) afford
Purchaser and its representatives and prospective lenders and
their representatives (collectively, "Purchaser's Advisors"),
upon reasonable notice, reasonable access during normal business
hours to Seller's, AFT's and the Acquired Companies' personnel,
properties (including subsurface testing), contracts, books and
records, and other documents and data; (b) furnish Purchaser and
Purchaser's Advisors with copies of all such contracts, books
and records, and other existing documents and data as Purchaser
may reasonably request; and (c) furnish Purchaser and
Purchaser's Advisors with such additional financial, operating,
and other data and information as Purchaser may reasonably
request; provided, however, that Purchaser covenants and agrees
to use best efforts to avoid interfering with the normal Business
operations of the Acquired Companies.
(b) Purchaser hereby agrees to pay, protect,
defend, indemnify and save Seller and AFT harmless against all
liabilities, obligations, claims (including mechanic's lien claims),
damages, penalties, causes of action, judgments, costs and expenses
(including, without limitation, attorneys' fees and expenses)
imposed upon, incurred by or asserted against them or any Acquired
Companies in connection with or arising out of the entry prior to
Closing upon any Leased Real Property by Purchaser and Purchaser's
Advisors, and the actions of such persons on the Leased Real
Property. In the event any part of the Leased Real Property is
damaged or excavated by Purchaser and Purchaser's Advisors,
Purchaser agrees in the event Contemplated Transactions are not
consummated, to make such additional payments to Seller as may be
reasonably required to return the Leased Real Property to its
condition immediately prior to such damage or excavation.
Notwithstanding any provision to the contrary herein, Purchaser's
obligations under this paragraph shall survive the expiration or
termination of this Agreement, and shall survive the Closing.
6.2 Operation of the Business of Seller, AFT and the
Acquired Companies. Between the date of this Agreement and the
Closing Date or termination of this Agreement, Seller and AFT
will, and will cause the Acquired Companies to:
(a) conduct the business of Seller, AFT and
the Acquired Companies only in the ordinary course of business;
(b) use commercially reasonable efforts to
(i) preserve intact the current business organization of Seller,
AFT and the Acquired Companies, (ii) keep available the services
of the current officers, employees, and agents of Seller, AFT and
the Acquired Companies, and (iii) maintain the relations and good
will with suppliers, customers, landlords, creditors, employees,
agents, and others having business relationships with Seller, AFT
and the Acquired Companies;
(c) confer with Purchaser concerning
operational matters of a material nature;
(d) otherwise report periodically to Purchaser concerning the
status of the business, operations, and finances of Seller, AFT
and the Acquired Companies; and
(e) not make distributions with respect to
the Membership Interests, the membership interests of AFT LLC, or
the capital stock of Seller or AFT.
6.3 Negative Covenant. Except as otherwise expressly
permitted by this Agreement, between the date of this Agreement
and the Closing Date or termination of this agreement, Seller and
AFT will not, and will cause the Acquired Companies not to,
without the prior consent of Purchaser, take any affirmative
action, or fail to take any reasonable action within their or
its control, as a result of which any of the changes or events
listed in Section 4.10 is likely to occur.
6.4 Required Approvals. As promptly as practicable
after the date of this Agreement, Seller and AFT will, and will
cause the Acquired Companies to, make any filings required by
Law to be made by them in order to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing
Date or termination of this Agreement, Seller and AFT shall, and
shall cause the Acquired Companies to, (i) cooperate with
Purchaser with respect to all filings that Purchaser elects to
make or is required by Law to make in connection with the
Contemplated Transactions and (ii) obtain and deliver all
Consents and notices required to be disclosed in Section 4.6 of
the Seller Disclosure Schedule.
6.5 Notification. Between the date of this Agreement
and the Closing Date or termination of this Agreement, Seller
and AFT will promptly notify Purchaser in writing if Seller or
AFT becomes aware of any fact or condition that causes or
constitutes a breach of any of Seller's, AFT's or Guarantor's
representations and warranties as of the date of this Agreement,
or if Seller or AFT becomes aware of the occurrence after the
date of this Agreement of any fact or condition that would
(except as expressly contemplated by this Agreement) cause or
constitute a breach of any such representation or warranty had
such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition; provided,
however, that no such notice shall be deemed to be a
modification of any representation or warranty. During the
same period, Seller and AFT will promptly notify Purchaser of
the occurrence of any breach of any covenant of Seller, AFT or
Guarantor in this Article 6 or of the occurrence of any event
that may make the satisfaction of the conditions in Article 8
impossible or unlikely.
6.6 No Negotiation; Exclusivity. Until such time,
if any, as this Agreement is terminated pursuant to Article 11,
Seller, AFT and Guarantor will not, and will cause the Acquired
Companies and each of their representatives not to, directly or
indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public
information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Purchaser)
relating to any transaction involving the sale of the Business
or assets of Seller, AFT or any Acquired Company, or any of the
capital stock or ownership interests of Seller, AFT or any
Acquired Company, or any merger, consolidation, business
combination, or similar transaction involving Seller, AFT or
any Acquired Company.
6.7 Seller Business Transfer.
(a) Immediately prior to the Closing Date,
Seller shall transfer and assign to the Company substantially
all of the assets of Seller, and all of the assets of Seller
reasonably required to conduct the Business of Seller consistent
with past practice, including but not limited to the Accounts
Receivable of Seller, which assets are set forth on the schedule
attached hereto as Exhibit G-1. Prior to the Closing Date,
Seller shall cause the Company to have good and marketable title
to, or a valid leasehold interest in, the properties and assets
used by it, located on its premises or shown on Exhibit G-1 or
acquired thereafter, free and clear of all Liens, except
Permitted Liens, and except for properties and assets disposed
of in the ordinary course of business and consistent with past
practices since the date of the Interim Balance Sheet.
(b) Immediately prior to the Closing Date,
Seller shall assign and transfer to the Company, and the Company
shall duly assume from Seller, only the obligations and
liabilities of Seller set forth on Exhibit G-2 hereto. All other
liabilities of Seller reflected on the Interim Balance Sheet
remain solely the liabilities of Seller and are not, and will
not become, liabilities of any Acquired Company.
6.8 AFT Business Transfer.
(a) Immediately prior to the Closing Date,
AFT shall transfer and assign to AFT LLC substantially all of the
assets of AFT, and all of the assets of AFT required to conduct the
Business of AFT consistent with past practice, which assets are set
forth on the schedule attached as Exhibit H-1 hereto. Prior to the
Closing Dare, AFT shall cause AFT LLC to have good and marketable
title to, or a valid leasehold interest in, the properties and
assets used by it, located on its premises or shown on Exhibit
H-1, the Interim Balance Sheet or acquired thereafter, free and
clear of all Liens, except Permitted Liens, and except for
properties and assets disposed of in the ordinary course of
business and consistent with past practices since the date of the
Interim Balance Sheet.
(b) Immediately prior to the Closing Date,
AFT shall assign and transfer to AFT LLC, and AFT shall duly
assume from AFT, only the obligations and liabilities of AFT set
forth on Exhibit H-2 hereto. All other liabilities of AFT reflected
on the Interim Balance Sheet remain solely the liabilities of AFT
and are not, and will not become, liabilities of any Acquired
Company.
6.9 Reasonable Efforts.
(a) Between the date of this Agreement and
the Closing Date, Seller and AFT will use all reasonable efforts
to cause the conditions in Article 7 to be satisfied.
(b) Between the date of this Agreement and the
Closing Date, Purchaser will use all reasonable efforts to cause
the conditions in Article 8 to be satisfied.
6.10 Tax Covenants.
(a) Without the prior written consent of
Purchaser, Seller, AFT and the Acquired Companies shall not make or
change any election, change an annual accounting period, adopt or
change any accounting method, file any amended Tax Return, enter
into any closing agreement, settle any Tax claim or assessment
relating to Seller, AFT and the Acquired Companies, surrender any
right to claim a refund of Taxes, consent to any extension or
waiver of the limitation period applicable to any Tax claim or
assessment relating to Seller, AFT and the Acquired Companies, or
take any other similar action relating to the filing of any Tax
Return or the payment of any Tax, if such election, adoption,
change, amendment, agreement, settlement, surrender, consent or
other action would have the effect of increasing the Tax liability
of Seller, AFT and the Acquired Companies for any period ending
after the Closing Date or decreasing any Tax attribute of the
Company existing on the Closing Date.
(b) Purchaser, the Acquired Companies, Seller
and AFT shall reasonably cooperate, as and to the extent reasonably
requested by the other Party, in connection with the filing of Tax
Returns and any audit, litigation or other proceeding with respect
to Taxes. Such cooperation shall include the retention and (upon
the 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. Seller and AFT agree, and agree to
cause the Acquired Companies, (i) to retain all books and records
with respect to Tax matters pertinent to Seller, AFT and the
Acquired Companies relating to any taxable period beginning before
the Closing Date until the expiration of the statute of limitations
(and, to the extent notified by Purchaser, Seller or AFT, any
extensions thereof) of the respective taxable periods, and to
abide by all record retention agreements entered into with any
taxing authority; and (ii) 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 Acquired Companies, AFT and Seller, as the case may be, shall
allow the other Party to take possession of such books and records.
Purchaser, AFT and Seller further agree, upon request, to use their
reasonable efforts to obtain any certificate or other document from
any governmental authority 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). Purchaser, AFT and Seller further agree,
upon request, to provide the other Party with all information that
either Party may be required to report pursuant to Code Section
6043 and all Treasury Regulations promulgated thereunder.
(c) All Tax sharing agreements or similar
agreements with respect to or involving any Acquired Company shall
be terminated as of the Closing Date and, after the Closing Date,
the Acquired Companies shall not be bound thereby or have any liability
thereunder.
(d) The Parties contemplated that each Acquired
Company's tax year will be ended by the Transactions and that each
Acquired Company will file a tax return for the short year created
thereby. The Parties agree to cause ARL LLC to make a Section 754
election for the taxable year in which the purchase of interest by
Purchaser takes place.
(e) All transfer, documentary, sales, use,
stamp, registration and other such Taxes, and all conveyance fees,
recording charges and other fees and charges (including any
penalties and interest) incurred in connection with the consummation
of the transactions contemplated by this Agreement shall be borne 50%
by Purchaser and 50% by Seller and AFT.
(f) The Acquired Companies shall make no election
pursuant to Treas. Reg. Section 301.7701-3 to be taxed as anything
other than a partnership.
ARTICLE 7. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE
Purchaser's obligation to purchase the Purchased Interests
and to take the other actions required to be taken by Purchaser at
the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be
waived by Purchaser, in whole or in part):
7.1 Accuracy of Representations and Warranties. Each
of Seller's, AFT's and Guarantor's representations and warranties
in this Agreement (considered collectively), and each of Seller's,
AFT's and Guarantor's representations and warranties (considered
individually), must have been accurate in all material respects as
of the date of this Agreement, and must be accurate in all material
respects as of the Closing Date as if made on the Closing Date. To
the extent any representation or warranty in this Agreement contains
a materiality or Material Adverse Effect qualification, the
representation or warranty as qualified shall remain as stated and
such qualification shall not be deemed to be lessened or otherwise
modified by the use of "material respects" in the preceding sentence.
7.2 Performance of Seller, AFT and Acquired Companies.
(a) All of the covenants and obligations that
Seller, AFT and Guarantor are required to perform or to comply with
pursuant to this Agreement at or prior to the Closing (considered
collectively), and each such covenant and obligation (considered
individually), must have been duly performed and complied with in
all material respects.
(b) Each document required to be delivered by
Seller, AFT and the Guarantor pursuant to Section 3.2 must have been
delivered.
7.3 Completion of Seller and AFT Business Transfers.
The Seller Business Transfer and the AFT Business Transfer shall
have been completed.
7.4 Governmental Authorizations. Except as set forth on
Schedule 4.20(b) of the Seller Disclosure Schedule, the Acquired
Companies shall have received all Governmental Authorizations
necessary for the conduct of the Business. With respect to the
Governmental Authorizations set forth on Schedule 4.20(b) of the
Seller Disclosure Schedules, Seller, the Company, AFT and the
Acquired Companies shall have commenced, and will thereafter
diligently pursue to completion, obtaining the balance of the
Governmental Authorizations necessary for the Acquired Companies'
conduct of the Business (as agreed-to between the parties).
7.5 Consents. Except as set forth on Schedule 7.5 of
the Seller Disclosure Schedule, each consent or notice required to
be disclosed in Section 4.6 of the Seller Disclosure Schedule must
have been obtained or delivered and must be in full force and
effect. Seller, the Company, AFT and the Acquired Companies shall
have commenced, and will thereafter diligently pursue to completion,
obtaining the consents and notices set forth on Schedule 7.5 of the
Seller Disclosure Schedules.
7.6. Releases. In addition to any other release required
pursuant to this agreement, releases from the proper Persons of all
liabilities and obligations of Seller, AFT any Acquired Company
arising under the agreements listed on Schedule 7.6 of the Seller
Disclosure Schedules.
7.7 No Proceedings. There must not have been commenced or
threatened any Proceeding (a) involving any challenge to, or seeking
damages or other relief in connection with, any of the Contemplated
Transactions or (b) that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with any of the Contemplated
Transactions.
7.8 No Claim Regarding Ownership or Sale Proceeds. There
must not have been made or threatened by any Person other than Seller
and AFT any claim asserting that such Person (a) is the holder or the
beneficial owner of, or has the right to acquire or to obtain
beneficial ownership of, any other voting, equity, or ownership interest
in, any Acquired Company or (b) is entitled to all or any portion of
the Purchase Price payable for the Purchased Interests.
7.9 No Prohibition. Neither the consummation nor the
performance of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time), materially
contravene, or conflict with, or result in a material violation of,
or cause Purchaser or any Person affiliated with Purchaser to suffer
any material adverse consequence under, (a) any applicable Law or
Order, or (b) any Law or Order that has been published, introduced,
or otherwise proposed by or before any Governmental Body.
7.10 No Material Adverse Effect. Since the date of this
Agreement, Seller, AFT and the Acquired Companies shall not have
suffered a Material Adverse Effect.
ARTICLE 8. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Purchased Interests, and
Seller's, AFT's and Guarantor's obligations to take the other
actions required to be taken by Seller, AFT or Guarantor at the
Closing is subject to the satisfaction, at or prior to the Closing,
of each of the following conditions (any of which may be waived by
Seller, AFT or Guarantor in whole or in part):
8.1 Accuracy of Representations and Warranties. All
of Purchaser's representations and warranties in this Agreement
(considered collectively), and each such representation and warranty
(considered individually), must have been accurate in all material
respects as of the date of this Agreement and must be accurate in
all material respects as of the Closing Date as if made on the
Closing Date. To the extent any representation or warranty in this
Agreement contains a materiality or Material Adverse Effect
qualification, the representation or warranty as qualified shall
remain as stated and such qualification shall not be deemed to be
lessened or otherwise modified by the use of "material respects"
in the preceding sentence.
8.2 Purchaser's Performance.
(a) All of the covenants and obligations that
Purchaser is required to perform or to comply with pursuant to
this Agreement at or prior to the Closing (considered collectively),
and each such covenant and obligation (considered individually),
must have been performed and complied with in all material respects.
(b) Purchaser must have delivered the Initial
Purchase Price, the ▇▇▇▇▇▇▇ Loan and the proceeds thereof, and each
of the documents required to be delivered by Purchaser pursuant to
Section 3.3.
8.3 No Proceedings. There must not have been commenced
or threatened any Proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the
Contemplated Transactions or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with
any of the Contemplated Transactions.
8.4 Financing. Purchaser shall have obtained financing
to fund the Contemplated Transactions on terms reasonably
acceptable to Purchaser, evidence of which shall be delivered to
Seller at least five days prior to Closing.
8.5 No Material Adverse Effect. Since the date of this
Agreement, Purchaser shall not have suffered a Material Adverse
Effect.
ARTICLE 9. INDEMNIFICATION
9.1 Indemnification.
(a) All representations, warranties, covenants
and indemnification obligations in this Agreement, the Seller
Disclosure Schedule, the supplements to the Seller Disclosure
Schedule, the certificates delivered pursuant to Section 3.2 and
3.3 and any other certificate or document delivered pursuant to
this Agreement shall survive the Closing and the consummation of
the Contemplated Transactions, for a period of 24 months, except
that (a) claims, if any, asserted in writing prior to the end of
24 month period identified as a claim for indemnification pursuant
to this Article 9 shall survive until finally resolved and
satisfied in full; and (b) representations and warranties contained
in Sections 4.4, 4.15, 4.22, 4.27 and 4.29, and any claims
resulting from a breach thereof shall survive for the full period
of the applicable statute of limitations, and until finally
resolved and satisfied in full if asserted in writing on or prior
to the expiration of any such period. The right to
indemnification, reimbursement or other remedy based upon such
representations, warranties, covenants and obligations shall
not be affected by any investigation (including any
environmental investigation or assessment) conducted with
respect to, or any knowledge of Seller, AFT or Guarantor
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 such representation, warranty,
covenant or obligation. The waiver of any condition based upon
the accuracy of any representation or warranty, or on the
performance of or compliance with any covenant or obligation,
will not affect the right to indemnification, reimbursement or
other remedy based upon such representations, warranties,
covenants and obligations.
(b) Subject to Section 9.1(d) hereof,
Seller, AFT and Guarantor shall indemnify, promptly defend and
hold harmless the Acquired Companies, Purchaser and its
Affiliates and subsidiaries, and their respective shareholders,
partners, members, employees, officers, directors, agents and
representatives (collectively, the "Seller Indemnified
Parties"), from and against any and all Losses (provided,
however, that any indemnification obligation pertaining to
punitive or consequential damages shall be limited only to
those arising as a result of Third Party Claims, as defined
below) relating to, resulting from or arising out of (i) any
breach of any representation or warranty made by Seller, AFT
or Guarantor in this Agreement; (ii) any breach of any covenant
or agreement of Seller, AFT or Guarantor contained in this
Agreement; (iii) any fraud, willful misconduct or bad faith of
Seller, AFT or Guarantor in connection with the transactions
contemplated by this Agreement; and (iv) any Taxes attributable
to periods (or portions thereof) ending on or prior to the
Closing Date; provided, however, that with respect to any breach
of any such representation or warranty, in each case solely with
respect to the indemnification obligations in this Section
9.1(b), Losses shall be determined without regard to any
qualification contained in any such representation or warranty
as to materiality or Material Adverse Effect. Guarantor
acknowledges that, in addition to the indemnification obligations
pursuant to this Article 9, Guarantor shall also guarantee in
full the obligations of AFT and ARL set forth to this Article
9 pursuant to the Guaranty. For purposes of this Section, in
the case of any Taxes that are payable in respect of a Taxable
period that begins before the Closing date but ends after the
Closing date, the portion of such Taxes attributable to the
portion of the Tax year ending on the Closing Date shall (x)
in the case of property taxes, be deemed to be the amount of
such tax for the entire Taxable period multiplied by a
fraction the numerator of which is the number of days in the
Taxable period up to the Closing Date, and the denominator of
which is the number of days in the entire Taxable period, and
(y) in the case of any other Tax, be deemed the amount which
would be payable if the relevant Taxable period ended on the
Closing Date.
(c) Purchaser shall indemnify, promptly
defend and hold harmless Seller and its respective Affiliates,
and their respective shareholders, partners, members,
employees, officers, directors, agents and representatives
(collectively, the "Purchaser Indemnified Parties"), from and
against any and all Losses relating to, resulting from or
arising out of (i) any breach of any representation or
warranty made by Purchaser in this Agreement; and (ii) any
breach of any covenant or agreement of Purchaser contained in
this Agreement or in any exhibit, schedule, certificate or
other instrument or document furnished or to be furnished by
the Purchaser pursuant hereto or in connection with the
transactions contemplated hereby.
(d) Notwithstanding anything to the contrary
in this Agreement, the aggregate liability of Seller, AFT or
Guarantor to the Seller Indemnified Parties pursuant to Sections
9.1(b)(i) and 9.1(b)(ii) shall be limited solely to the Purchase
Price; provided, however, that none of Seller, AFT or Guarantor
shall have any liability under clauses 9.1(b)(i) and 9.1(b)(ii)
above unless the aggregate of all Losses relating thereto for
which the such parties would, but for this provision, be liable
exceeds on a cumulative basis an amount equal to Fifty Thousand
Dollars ($50,000); and provided further, however, that none of
Seller , AFT or Guarantor shall have any liability under this
Article 9 to the extent the liability or obligation arises
solely as a result of any action taken or omitted to be taken
by Purchaser or any of its affiliates (including any officers
or employees of Purchaser) after the Closing. The foregoing
limitation shall not apply with respect to, and Seller, AFT
and Guarantor shall be fully liable for any and all Losses
suffered by any Seller Indemnified Party in connection with, a
breach of any representation or warranty made in Sections 4.2,
4.11, 4.27 or 4.29.
(e) The indemnification provisions set
forth in this Article 9 are the exclusive rights and remedies
of the Parties for any inaccuracy or breach of the
representations, warranties, covenants and obligations made in
this Agreement; provided, however, that Purchaser shall not be
deemed to have waived any rights, claims, causes of action or
remedies if and to the extent such rights, claims, causes of
action or remedies arise in instances of fraud, intentional
misrepresentation or intentional breach or may not be waived
under applicable law.
(f) The amount of any Losses for which
indemnification is provided under this Article 9 shall be net
of any amounts recovered by the indemnified party under
insurance policies or other third-party payment or rights
against third parties with respect to such Losses and shall
be reduced to take account of any net tax benefit realized
by the indemnified party arising from the incurrence or
payment of any such Losses.
9.2 Administration of Third Party Claims.
(a) Promptly following receipt by any
of the Seller Indemnified Parties or Purchaser Indemnified
Parties (each, an "Indemnified Party") of notice by a third
party (including any Governmental Authority) of any complaint
or the commencement of any audit, investigation, action or
proceeding with respect to which such Indemnified Party may
be entitled to receive indemnification for Losses, such
Indemnified Party shall notify Purchaser, AFT, Guarantor or
Seller, as the case may be (the "Indemnifying Party"),
promptly following the Indemnified Party's receipt of such
complaint or of notice of the commencement of such audit,
investigation, action or proceeding; provided, however, that
the failure to so notify the Indemnifying Party shall relieve
the Indemnifying Party from liability hereunder with respect
to such claim only if, and only to the extent that, such failure
to so notify the Indemnifying Party results in the forfeiture by
or any adverse effect on the Indemnifying Party of rights and
defenses otherwise available to the Indemnifying Party with
respect to such claim. The Indemnifying Party shall have the
right, upon written notice delivered to the Indemnified Party
within thirty (30) days after the Indemnified Party's delivery
of notice assuming full responsibility for any Losses resulting
from such audit, investigation, action or proceeding, to assume
the defense of such audit, investigation, action or proceeding,
including the employment of counsel and the payment of the fees
and disbursements of such counsel. In the event, however,
that the Indemnifying Party declines or fails to assume the
defense of the audit, investigation, action or proceeding on
the terms provided above in either case within such thirty (30)
day period, then the Indemnifying Party shall pay the reasonable
fees and disbursements of counsel for the Indemnified Party as
incurred; provided, however, that the Indemnifying Party shall
not be required to pay the fees and disbursements of more than
one counsel for all Indemnified Parties in any jurisdiction in
any single audit, investigation, action or proceeding. In any
audit, investigation, action or proceeding for which
indemnification is being sought hereunder, the Indemnified Party
or the Indemnifying Party, whichever is not assuming the defense
of such action, shall have the right to participate in such matter
and to retain its own counsel at such Party's own expense. The
Indemnifying Party or the Indemnified Party, as the case may be,
shall at all times use reasonable efforts to keep the
Indemnifying Party or Indemnified Party, as the case may be,
reasonably apprised of the status of the defense of any matter
the defense of which it is maintaining and to cooperate in good
faith with each other with respect to the defense of any such
matter.
(b) Neither the Indemnifying Party nor the
Indemnified Party may, without the prior written consent of the
other party (which shall not be unreasonably withheld or delayed),
settle or compromise any claim or consent to the entry of any
judgment with respect to which indemnification is being sought
hereunder unless such settlement, compromise or consent (i)
includes an unconditional release of the other party and its
officers, directors, members, managers, employees and Affiliates
from all liability arising out of such claim, (ii) does not
contain any admission or statement suggesting any wrongdoing or
liability on behalf of the other party or its officers,
directors, members, managers, employees or Affiliates, and
(iii) does not contain any equitable order, judgment or term
that in any manner affects, restrains or interferes with the
business of the other party or any of its officers, directors,
members, managers, employees or Affiliates.
9.3 Offset of Payments. Purchaser shall have the
right to offset any payments due by Seller, AFT or Guarantor
under this Article 9 against any portion of the Initial
Purchase Price or any portion of the Purchase Price to be paid
pursuant to Section 2.2(b).
ARTICLE 10. ADDITIONAL AGREEMENTS
10.1 Continuing Assistance. From and after the
Closing Date, upon the terms and subject to the conditions set
forth in this Agreement, each Party shall use all reasonable
efforts to take or cause to be taken all actions and to do or
cause to be done all things necessary, proper or advisable under
applicable Law to consummate and make effective the transactions
contemplated by this Agreement. Without limiting the generality of
the foregoing, Seller and Purchaser (at their own cost and expense)
shall assist each other in the preparation of their respective Tax
Returns and the filing and execution of Tax elections, if required,
as well as any audits or litigation that ensue as a result of the
filing thereof, to the extent that such assistance is reasonably
requested.
10.2 Further Transfers. Each Party shall execute and
deliver such further instruments of conveyance and transfer and
take such additional action as any Party may reasonably request
to effect, consummate, confirm or evidence the sale and transfer
to Purchaser of the Purchased Interests and any other
transactions contemplated hereby. Purchaser shall execute and
deliver such further instruments of assumption and take such
additional action as Seller may reasonably request to effect,
consummate, confirm or evidence the transactions contemplated
hereby.
10.3 Expenses. Except as otherwise specifically
provided in this Agreement, the Parties shall pay all of their
respective fees, costs and expenses (including fees, costs and
expenses of legal counsel, investment bankers, brokers or other
representatives and consultants and appraisal fees, costs and
expenses) incurred in connection with the negotiation of this
Agreement and the other Transaction Documents, the performance
of their respective obligations hereunder and thereunder, and
the consummation of the transactions contemplated hereby and
thereby.
10.4 Books and Records. Unless otherwise consented
to in writing by Purchaser (as the case may be), Seller shall
not, for a period of seven (7) years following the Closing Date,
destroy, alter or otherwise dispose of any of the books and
records of Seller or the Acquired Companies or retained by
Seller in connection with the Business without first offering
to surrender to Purchaser, such books and records or any portion
thereof of which Purchaser may intend to destroy, alter or
dispose. Seller shall allow Purchaser's representatives,
attorneys and accountants access to such books and records, upon
reasonable request during Seller's normal business hours, for
the purpose of examining and copying the same in connection with
any matter whether or not related to or arising out of this
Agreement or the transactions contemplated hereby.
10.5 Governmental Authorizations. As promptly as
practicable after the date of this Agreement, but in no event
more than 60 days after the date hereof, Seller shall deliver,
or caused to be delivered to the Acquired Companies, the
licenses and certifications set forth on Section 4.20(b) of
the Seller Disclosure Schedule.
10.6 Fleet Operator Agreement. The parties
acknowledge that Seller and AFT have previously purchased
the plates used by various of their respective independent
contractors, which plates cannot be transferred to the Acquired
Companies with any assignment of the Independent Business
Associate Contract (the "IBAC") relating to such operations by
such independent contractors, and that it may not be in the
Acquired Companies' best interests to purchase new plates for
such vehicles prior to the expiration of the existing plate
terms. In lieu thereof, and as agreed to between the parties,
Seller and AFT agree to (i) remain a party to IBAC's existing
as of the Closing Date; (ii) enter into a Fleet Operator
Agreement with each of the Acquired Companies to contract the
services of such independent contractors to their respective
operations; and (iii) assign each applicable IBAC to each of
the Acquired Companies, as appropriate, commensurate with the
expiration of plates previously provided to any independent
contractor and the Acquired Companies' purchase of new plates
relating thereto.
ARTICLE 11. TERMINATION
11.1 Termination Events. This Agreement may, by
notice given prior to or at the Closing, be terminated:
(a) by either Purchaser or Seller if a
material breach of any provision of this Agreement has been
committed by the other Party and such Breach has not been
waived;
(b) (i) by Purchaser if any of the
conditions in Article 8 has not been satisfied by December
30, 2008 or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Purchaser to
comply with its obligations under this Agreement) and Purchaser
has not waived such condition on or before the Closing Date;
or (ii) by Seller, if any of the conditions in Article 7 has
not been satisfied as of December 30, 2008 or if satisfaction
of such a condition is or becomes impossible (other than
through the failure of Seller, AFT or the Acquired Companies
to comply with their obligations under this Agreement) and
Seller has not waived such condition on or before the Closing
Date;
(c) by mutual consent of Purchaser and
Seller;
(d) by either Purchaser or Seller if the
Closing has not occurred (other than through the failure of
any Party seeking to terminate this Agreement to comply fully
with its obligations under this Agreement) on or before
December 31, 2008; or
(e) at any time by Purchaser upon
Seller's proposed modification, supplementation or amendment
of any representation and warranty contained herein to which
Purchaser does not consent.
11.2 Effect of Termination. If this Agreement is
terminated pursuant to Section 11.1, all further obligations
of the Parties under this Agreement will terminate; provided,
however, that, that this Section 11.2, Article 9 and Article
12 shall survive any termination or expiration of this
Agreement.
ARTICLE 12. MISCELLANEOUS
12.1 Amendment and Waiver. This Agreement may be
amended and any provision of this Agreement may be waived,
provided that any such amendment or waiver shall be binding
upon a Party only if such amendment or waiver is set forth in
a writing executed by the Parties. No course of dealing
between or among any Persons having any interest in this
Agreement shall be deemed effective to modify, amend or
discharge any part of this Agreement or any rights or
obligations of any Party under or by reason of this
Agreement.
12.2 Remedies. The Parties shall have all rights
and remedies set forth in this Agreement and all rights and
remedies which such Persons have been granted at any time
under any other agreement or contract and all of the rights
which such Persons have under any law. Any Person having
any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically to recover
damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law.
12.3 Notices. All notices, demands and other
communications to be given or delivered under or by reason
of the provisions of this Agreement shall be in writing and
shall be deemed to have been given (i) at the time given, if
personally delivered or (ii) at the time received, if mailed
or sent by reputable overnight express courier (charges
prepaid), certified or registered mail, postage prepaid and
return receipt requested. Notices, demands and
communications to Purchaser, Seller, AFT and Guarantor
shall, unless another address is specified in writing, be
sent to the address or telecopy number indicated below:
Notices to Purchaser:
US 1 Industries, Inc.
▇▇▇ ▇. ▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CEO
Notices to Seller:
ARL, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇, CEO
Notices to AFT:
Aficionado Transport, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇, CEO
Notices to Guarantor:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
12.4 Binding Agreement; Assignment. This Agreement and
all of the provisions hereof shall be binding upon and inure to
the benefit of the Parties and their respective successors and
permitted assigns; provided that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by
Seller without the prior written consent of Purchaser or by
Purchaser (except as otherwise provided in this Agreement)
without the prior written consent of Seller; provided further
that: (a) Purchaser may at any time, at its sole discretion,
assign, in whole or in part, its rights and obligations pursuant
to this Agreement to one or more of its Affiliates (provided that
no such assignment shall relieve Purchaser of its obligations
hereunder); and (b) Purchaser may assign its rights under this
Agreement for collateral security purposes to any lender providing
financing to Purchaser or any of its Affiliates (provided that no
such assignment shall relieve Purchaser of its obligations
hereunder).
12.5 Severability. Whenever possible, each provision
of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provisions or the remaining provisions of this
Agreement.
12.6 Interpretation. The headings and captions used in
this Agreement, in any Schedule or Exhibit hereto, in the table of
contents or in any index hereto are for convenience of reference
only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of
this Agreement or any Schedule or Exhibit hereto, and all provisions
of this Agreement and the Schedules and Exhibits hereto shall be
enforced and construed as if no caption or heading had been used
herein or therein. Each defined term used in this Agreement shall
have a comparable meaning when used in its plural or singular form.
Wherever the context requires, the gender of all words used in this
Agreement includes the masculine, feminine and neuter. The use of
the word "including" herein shall mean "including without limitation"
and, unless the context otherwise required, "neither," "nor," "any,"
"either" and "or" shall not be exclusive. Use of the phrase "to the
knowledge of Seller or AFT," "to Seller's or AFT's knowledge" or words
of similar import shall mean and include the actual, subjective
knowledge or awareness of Guarantor or ▇▇▇▇▇ ▇▇▇▇▇ or the knowledge
of Guarantor or ▇▇▇▇▇ ▇▇▇▇▇ that would have been obtained in the
course of conducting a reasonable investigation within the area of
his function and responsibility. The Parties have participated
jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by the
Parties, and no presumption or burden of proof shall arise favoring
or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement.
12.7 Entire Agreement. This Agreement and the documents
referred to herein contain the entire agreement between the Parties
and supersede any prior understandings, agreements or
representations by or between the Parties, written or oral, which
may have related to the subject matter hereof in any way, including
but not limited to that certain Letter of Intent, dated October 7,
2008, by and among the Parties.
12.8 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original but
all of which taken together shall constitute one and the same
instrument.
12.9 Governing Law. All questions concerning the
construction, validity and interpretation of this Agreement shall
be governed by and construed in accordance with the domestic laws
of the State of Indiana, without giving effect to any choice of
law or conflict of law provision (whether of the State of Indiana
or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Indiana. Any
disagreement, dispute or controversy between the Parties with
respect to this Agreement shall be resolved by arbitration under
the commercial arbitration rules of the American Arbitration
Association. Upon written request of any Party hereto tendered to
all other Parties, such arbitration shall be conducted before a
panel of three arbitrators (unless the Parties agree to one
arbitrator) with each side to the dispute selecting one arbitrator
and the arbitrators so selecting the third arbitrator. The
arbitration award shall be final and binding upon the Parties, and
judgment on the award may be entered by and enforced in any court
having competent jurisdiction over the parties and subject matter.
Unless otherwise allocated by the arbitrators, the expenses of the
arbitration proceedings shall be borne equally be all parties
thereto. All arbitration proceedings hereunder shall be conducted
in Indianapolis, Indiana.
12.10 Parties in Interest. Nothing in this Agreement,
express or implied, is intended to confer on any Person other than
the Parties and their respective successors and assigns any rights
or remedies under or by virtue of this Agreement.
12.11 Confidential Nature of Information. Each Party
agrees that it will treat in confidence all documents, materials
and other information which it shall have obtained regarding the
other Party during the course of the negotiations leading to the
consummation of the Contemplated Transactions (whether obtained
before or after the date hereof), the investigation provided for
herein, and the preparation of this Agreement and other related
documents. The obligation of each Party to treat such documents,
materials and other information in confidence shall not apply to
any information which (i) such Party can demonstrate was already
lawfully in its possession prior to the disclosure thereof by the
other Party, (ii) is known to the public and did not become so
known through any violation of a legal obligation,(iii) became
known to the public through no fault of such Party, (iv) is later
lawfully acquired by such Party from other sources without any
violation of a legal obligation, (v) is required to be disclosed
under the provisions of any state or United States statute or
regulation issued by a duly authorized agency, board or commission
thereof, or (vi) is required to be disclosed by a rule or order
of any court of competent jurisdiction.
* * * * *
IN WITNESS WHEREOF, the Parties have executed this
Agreement as of the date first written above.
"Purchaser"
US 1 INDUSTRIES, INC.
By: ___________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Chief Financial Officer
"Seller"
ARL, INC.
By: __________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President
"AFT"
AFICIONADO TRANSPORT, INC.
By: __________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President
"Guarantor"
_________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
SCHEDULE 2.5
LIST OF CERTAIN ARL AND AFT GUARANTEES
All obligations of Seller and AFT arising under the following:
1. Consent to Assignment of Lease, dated February 11, 2008, among
First Industrial Texas, LP (as landlord), MCC Transport, Inc.
(as assignor), Infinity Capital Leasing, LLC (as assignee), and
ARL (as guarantor).
2. Lease Agreement, dated January, 2008, by and between Dallas-Garland
Industrial, LP (d/b/a FIT Dallas-▇▇▇▇▇▇▇, ▇▇), as landlord, and
Infinity Capital Leasing, LLC, as tenant, and ARL, as guarantor.
3. Commercial Guaranty Agreement, dated June 18, 2008, by and between
Aficionado Transport, Inc. and Enterprise Bank, guaranteeing the
$270,000 loan to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
4. Commercial Guaranty Agreement, dated June 18, 2008, by and between
Aficionado Transport, Inc. and Enterprise Bank, guaranteeing the
$760,000 loan to Trinity.
5. Commercial Guaranty Agreement, dated June 18, 2008, by and between
ARL and Enterprise Bank guaranteeing the $270,000 loan to ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇.
6. Commercial Guaranty Agreement, dated June 18, 2008, by and between
ARL and Enterprise Bank guaranteeing the $760,000 loan to Trinity.
7. Guaranty, dated August 29, 2006, by ARL in favor of Financial
Federal Credit, Inc., guarantying the payment and performance of
▇▇▇▇▇▇ Ferry, LLC's obligations to Financial Federal under the
$878,688 Promissory Note, dated, August, 29, 2006.
8. Guaranty & Survivorship Agreement with Power to Confer Judgment,
dated April 1, 2008, by ARL in favor of Dollar Bank.
SELLER DISCLOSURE SCHEDULES
[attached]
EXHIBIT A
[INTENTIONALLY OMITTED]
EXHIBIT B
FORM OF ▇▇▇▇▇▇▇ LOAN
U.S. $85,000.00
LOAN AGREEMENT
Effective as of December __, 2008
between
ARL, Inc.
as Borrower,
and
US 1 Industries, Inc.
as Lender
LOAN AGREEMENT
This Loan Agreement (this "Agreement"), to be effective as of
December ___, 2008 (the "Effective Date"), is between the undersigned
Borrower and the undersigned Lender.
Background:
As a condition precedent to consummation of the transactions
contemplated in that certain Purchase Agreement by and among
Borrower, Lender, Aficionado Transport, Inc., and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
dated as of December 12, 2008, Borrower desires to borrow from
Lender, and Lender desires to loan to Borrower, eighty-five thousand
dollars ($85,000.00) pursuant to the terms herein.
NOW, THEREFORE, in consideration for good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. PARTIES
1.1 "Borrower" is ARL, Inc., a Pennsylvania corporation,
and its successors and assigns.
1.2 "Lender" is US 1 Industries, Inc., an Indiana
corporation.
SECTION 2. LOAN
2.1 Term Loan.
(a) Lender, as of the Effective Date, has funded in
principal amount of EIGHTY-FIVE THOUSAND DOLLARS ($85,000.00)
(the "Principal") to Borrower upon the terms and conditions set
forth in this Agreement (the "Loan").
(b) The Loan shall be evidenced by a promissory note
issued by Borrower to the order of Lender in the form attached
hereto as Exhibit A (the "Note").
2.2 Obligations. "Obligations" shall mean the Loan
and all other indebtedness, liabilities and obligations of every
kind, nature and description owing by Borrower to Lender and/or
its affiliates, including principal, interest, charges, fees and
expenses, however evidenced, whether as principal, surety,
endorser, guarantor or otherwise, whether arising under this
Agreement or otherwise whether existing on the Effective Date or
thereafter arising, whether arising before, during or after the
Term or after the commencement of any case with respect to Borrower
under the United States Bankruptcy Code or any similar statute,
whether direct or indirect, absolute or contingent, joint or
several, due or not due, primary or secondary, liquidated or
unliquidated, secured or unsecured, original, renewed or extended
and whether arising directly or howsoever acquired by Lender
including from any other entity outright, conditionally or as
collateral security, by assignment, merger with any other entity,
participations or interests of Lender in the obligations of Borrower
to others, assumption, operation of law, subrogation or otherwise
and shall also include all amounts chargeable to Borrower under this
Agreement or in connection with any of the foregoing.
2.3 Principal and Interest Payments.
Interest shall accrue from the Effective Date at the rate
of 6.5 percent (6.5)% per annum on the Principal amount from time
to time outstanding, as follows:
(a) Principal and interest shall be payable in 48
equal consecutive monthly installments each in the amount of
$2015.77 commencing on January 1, 2009 and continuing on the 1st
day of each month thereafter to and including December 1, 2013, and
(b) The entire unpaid principal balance hereof,
together with all accrued but unpaid interest thereon, shall be due
and payable on December 1, 2012, if not sooner paid.
Each installment of Principal and interest, when paid, shall
be applied first to the payment of interest accrued but unpaid on the
outstanding principal balance of the Note, and the residue thereof,
if any, shall be applied toward the payment of Principal. On and
after any event of default under the Note, or termination or non-
renewal thereof, interest on all unpaid Obligations shall accrue at
the rate of the lesser of twelve percent (12%) per annum or the
maximum rate permitted under any applicable law or regulation until
such time as all Obligations are indefeasibly paid in full
(notwithstanding entry of any judgment against Borrower or the
exercise of any other right or remedy by Lender), and all such
interest shall be payable on demand. In no event shall charges
constituting interest exceed the rate permitted under any applicable
law or regulation, and if any provision of this Agreement is in
contravention of any such law or regulation, such provision shall
be deemed amended to conform thereto.
2.4 Prepayment of Principal.
The Principal amount of the Loan may be prepaid, in whole
or in part without penalty. If such prepayment is made during (and
not at the beginning of) any month, Lender shall be entitled to the
interest on such prepaid Principal that Lender would otherwise be
due for that month, pro-rated for the number of days between the end
of the previous month and the date on which such notice was
delivered. Payment of such pro-rated interest amount shall be due
and payable upon the end of such month and must be paid to Lender
with in forty-five (45) days of the end of such quarter.
SECTION 3. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS.
Borrower hereby represents, warrants and covenants to Lender
the following:
3.1 Other Agreements. Borrower is not in default in any
respect of the performance, observance, or fulfillment of any of the
obligations, covenants or conditions contained in any agreement made
by Borrower to any lending institution or other entity extending
credit to Borrower.
3.2 Notice. Borrower shall advise Lender in writing
promptly of (a) any adverse change in the financial condition of
Borrower, and (b) any pending or threatened claim, litigation, or
investigation that either does or could jeopardize or impair the
financial condition of Borrower.
3.3 Books and Records. Borrower shall keep and maintain
its books and records in accordance with generally accepted
accounting principles, consistently applied. Lender may perform, or
engage an outside accounting firm to perform, no more frequently than
twice each calendar year, an audit on Borrower's financial statements,
so long as such audit is completed at Lender's sole expense and
Borrower is provided at least ten (10) business days prior written
notification of such audit.
3.4 Payments. All Obligations under this Agreement and
the Note shall be payable by 2:00 p.m., Valparaiso, Indiana time, on
the date such Obligations are due, at Lender's Address set forth on
the signature page below or at such other place as Lender may
expressly designate from time to time for purposes of this Section
3.4.
SECTION 4. EVENTS OF DEFAULT AND REMEDIES.
All Obligations shall be immediately due and payable, without
notice or demand. Upon the occurrence of one or more events of default
as described in the Note (each, an "Event of Default"), and at any
time thereafter, Lender shall have all rights and remedies provided
in this Agreement, any other agreements between Borrower and Lender,
including without limitation the Uniform Commercial Code (as defined
below) or other applicable law.
SECTION 5. GOVERNING LAW AND CERTAIN OTHER WAIVERS.
5.1 Governing Law. All questions concerning the
construction, validity and interpretation of this Agreement and the
Note shall be governed by and construed in accordance with the
domestic laws of the State of Indiana, without giving effect to any
choice of law or conflict of law provision (whether of the State of
Indiana or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Indiana.
References herein to the "Uniform Commercial Code" shall, unless
otherwise provided herein, refer to the Uniform Commercial Code in
effect in the State of Indiana. Any disagreement, dispute or
controversy between Borrower and Lender with respect to this Agreement
and the Note shall be resolved by arbitration under the commercial
arbitration rules of the American Arbitration Association. Upon
written request of Borrower or Lender tendered to the other party,
such arbitration shall be conducted before a panel of three arbitrators
(unless Borrower and Lender agree to one arbitrator) with each side to
the dispute selecting one arbitrator and the arbitrators so selecting
the third arbitrator. The arbitration award shall be final and
binding upon Borrower and Lender, and judgment on the award may be
entered by and enforced in any court having competent jurisdiction
over the parties and subject matter. Unless otherwise allocated by
the arbitrators, the expenses of the arbitration proceedings shall be
borne equally by the Borrower and Lender. All arbitration proceedings
hereunder shall be conducted in Indianapolis, Indiana.
5.2 Waiver of Jury Trial. Borrower hereby waives, to the
fullest extent permitted by applicable law, any right Borrower may
have under any applicable law to a trial by jury with respect to any
suit or legal action which may be commenced by or against Lender
concerning the interpretation, construction, validity, enforcement or
performance of this Agreement, the Note or any other agreement or
instrument executed in connection herewith.
5.3 No Waiver by Lender. The execution, delivery and
performance of this Agreement by Lender and the acceptance by Lender
of performance of Borrower hereunder shall be without prejudice to,
and is not a waiver or release of Lender's rights at any time in the
future to exercise any and all rights conferred upon the Lender by
this Agreement or the Note or otherwise at law or in equity, including
but not limited to, the right to accelerate the Note and to institute
collection proceedings against Borrower.
SECTION 6. TERM OF AGREEMENT; MISCELLANEOUS
6.1 Term. This Agreement shall be deemed effective as
of the Effective Date and shall continue in full force and effect
until all Principal and interest due under this Note is paid in full
(the "Term").
6.2 Notices. Except as otherwise provided, all notices,
requests and demands hereunder shall be (a) made to Lender or
Borrower at their respective address set forth on the signature
page hereto, or to such other address as either party may designate
by written notice to the other in accordance with this provision,
and (b) deemed to have been given or made: if by hand, immediately
upon delivery; if by fax, email or other electronic transmission,
immediately upon receipt; if by overnight delivery service, one day
after dispatch; and if by first class or certified mail, three days
after mailing.
6.3 Severability. If any provision of this Agreement is
held to be invalid or unenforceable, such provision shall not affect
this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid
or unenforceable.
6.4 Entire Agreement; Amendments; Assignments. This
Agreement and the Note contain the entire agreement of the parties as
to the subject matter hereof, all prior commitments, proposals and
negotiations concerning the subject matter hereof being merged herein.
Neither this Agreement nor any provision hereof shall be amended,
modified or discharged orally or by course of conduct, but only by a
written agreement signed by Lender and Borrower. This Agreement shall
be binding upon and inure to the benefit of each of the parties hereto
and their respective heirs, personal representatives, successors and
assigns.
6.5 Discharge of Borrower. No termination of this Agreement
shall relieve or discharge Borrower of his Obligations, duties and
covenants hereunder or otherwise until such time as all Obligations to
Lender have been indefeasibly paid and satisfied in full, including,
without limitation, all warranties and waivers of Borrower.
6.6 Usage. All terms used herein which are defined in the
Uniform Commercial Code shall have the meanings given therein unless
otherwise defined in this Agreement and all references to the singular
or plural herein shall also mean the plural or singular, respectively.
(signatures on the following page)
IN WITNESS WHEREOF, Borrower and Lender have duly executed
this Agreement as of the ____ day of December, 2008.
BORROWER:
ARL, INC.
By: _____________________________
Name:
Its:
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
LENDER:
US 1 INDUSTRIES, INC.
By: _____________________________
Name:
Its:
Address: ▇▇▇ ▇. ▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
EXHIBIT A
FORM OF PROMISSORY NOTE
PROMISSORY NOTE
December ___, 2008
$85,000.00
FOR VALUE RECEIVED, the undersigned ("Maker") promises to
pay to the order of US 1 Industries, Inc., an Indiana corporation
("Holder"), at Holder's office located at ▇▇▇ ▇. ▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as the holder hereof may
designate, the aggregate principal sum of EIGHTY-FIVE THOUSAND
DOLLARS ($85,000.00), together with interest on so much of the
principal balance of this Note as may be outstanding and unpaid
from time to time, calculated on the basis of a 360-day year and
actual days elapsed, at the rate or rates per annum indicated
below.
This Note is executed and delivered in connection with that
certain Loan Agreement, dated as of December ___, 2008, by and
between Maker and Holder (as the same may from time to time be
amended, modified or supplemented or restated, the "Loan
Agreement"), and that certain Membership Interest Purchase
Agreement, dated as of December 12, 2008, by and among Maker,
Holder, Aficionado Transport, Inc., and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
Additional rights and obligations of the Maker are set forth in
the Loan Agreement.
1. Principal and Interest. The unpaid principal balance of
this Note shall bear interest at a rate per annum equal to 6.5
percent 6.5%. Principal and interest shall be payable in 48
equal consecutive monthly installments each in the amount of
$2015.77 commencing on January 1, 2009 and continuing on the 1st
day of each month thereafter to and including December 1, 2013.
The entire unpaid principal balance hereof, together with all
accrued but unpaid interest thereon, shall be due and payable
on December 1, 2013, if not sooner paid.
Each payment of principal, interest or other amounts due
under this Note shall be paid to Holder, in United States
Dollars, at Holder's address provided herein so that it is
received by Holder on the date specified for payment under this
Note. Maker shall pay a late charge of five percent (5%) of any
installment payment hereunder which is not received by Holder
within ten (10) days after such payment is due. Each payment
of principal and interest, when paid, shall be applied first to
the payment of interest accrued but unpaid on the outstanding
principal balance of this Note, and the residue thereof, if
any, shall be applied toward the payment of principal. On and
after any Event of Default under this Note, or termination or
non-renewal thereof, interest on all unpaid obligations
hereunder shall accrue at the rate of the lesser of twelve
percent (12%) per annum or the maximum rate permitted under
any applicable law or regulation until such time as all
obligations are indefeasibly paid in full (notwithstanding
entry of any judgment against Maker or the exercise of any
other right or remedy by Holder), and all such interest shall
be payable on demand. In no event shall charges constituting
interest exceed the rate permitted under any applicable law or
regulation, and if any provision of this Agreement is in
contravention of any such law or regulation, such provision
shall be deemed amended to conform thereto. All payments under
this Note shall be made without any set-off, counterclaim or
deduction whatsoever, and Maker hereby irrevocably waives all
rights of set-off, counterclaim and deduction.
2. Prepayment. Maker may prepay the principal balance of
this Note in whole or in part without premium or penalty;
provided, however, that the amounts prepaid shall she applied
first to accrued and unpaid interest and then to installments of
principal in the inverse order of maturity. If such prepayment
is made during (and not at the beginning of) any month, Holder
shall be entitled to the interest on such prepaid principal that
Holder would otherwise be due for that month, pro-rated for the
number of days between the end of the previous month and the
date on which such notice was delivered. Payment of such pro-
rated interest amount shall be due and payable upon the end of
such month and must be paid to Holder with in forty-five (45)
days of the end of such month.
This Note and Maker's indebtedness hereunder are
secured by any and all security interests, security titles or
other liens which Holder may now or hereafter have or acquire in
or to any present or future real or personal property assets of
Maker, except to the extent that this Note and Maker's
indebtedness hereunder are expressly excluded from the coverage
of any such lien under the terms of the security agreement,
security deed, assignment, mortgage or other collateral document
which granted such lien.
Maker will from time to time furnish to Holder
information regarding the financial condition and property of
Maker as Holder may reasonably require, and, if requested by
Holder, Maker will furnish year-end financial statements within
90 days after each year-end.
3. Representations and Warranties. Maker hereby represents
and warrants to Holder that the execution, delivery and performance
by Maker of this Note is within its power; the execution, delivery
and performance by Maker of this Note has been duly authorized by
all necessary action; this Note is the legal, binding, valid and
enforceable obligation of Maker and the execution, delivery and
performance by Maker of this Note does not (i) contravene, or
constitute (with or without the giving of notice or lapse of time
or both) a violation of any provision of applicable law, or a
default under any agreement, judgment, injunction, order, decree
or other instrument binding upon or affecting Maker, the result
of which could reasonably be expected to have a material adverse
effect, (ii) result in the creation or imposition of any lien on
any of Maker's assets, or (iii) give cause for the acceleration of
any obligations of Maker to any other creditor.
4. Default. The occurrence of any one or more of the
following events will constitute a default by Maker hereunder
(hereinafter referred to as an "Event of Default"): (i) Maker
fails to pay when due any amount payable under this Note or
otherwise fails to perform or breaches a covenant in this Note;
(ii) any statement, representation, or warranty made by Maker or
on Maker's behalf in connection with this Note proves to have been
untrue, incorrect, misleading or incomplete in any material respect
as of the date made; (iii) Maker is in default under any other
agreement to which Holder (or any of its affiliates) and Maker are
parties or under any other instrument executed by Maker in favor of
Holder (or any of its affiliates), including without limitation any
loan agreement, lease agreement, security agreement, security deed,
pledge agreement, assignment, note or guaranty; (iv) Maker becomes
insolvent or makes an assignment for the benefit of creditors, or an
action is brought by Maker seeking dissolution or liquidation of its
assets or seeking the appointment of a trustee, interim trustee,
receiver or other custodian for Maker's property, or Maker commences
a voluntary case under the United States Bankruptcy Code, or a
reorganization or arrangement proceeding is instituted by Maker for
the settlement, readjustment, composition or extension of Maker's
debts upon any terms, or an action or petition is otherwise brought
by Maker seeking similar relief or alleging that Maker is insolvent
or unable to pay such person's debts as they mature; (v) an action is
brought against Maker seeking Maker's dissolution or liquidation of
Maker's assets or seeking the appointment of a trustee, interim trustee,
receiver or other custodian for Maker's property, and such action is
consented to or acquiesced in by Maker or is not dismissed within sixty
(60) days of the date upon which it was instituted, or a proceeding under
the United States Bankruptcy Code is instituted against Maker and an
order for relief is entered in such proceeding or such proceeding is
consented to or acquiesced in by Maker or is not dismissed within sixty
(60) days of the date upon which it was instituted, or a reorganization
or arrangement proceeding is instituted against Maker for the settlement,
readjustment, composition or extension of Maker's debts upon any terms
and such proceeding is consented to or acquiesced in by Maker or is not
dismissed within sixty (60) days of the date upon which it was instituted,
or an action or petition is otherwise brought against Maker seeking
similar relief or alleging that such person is insolvent, unable to pay
his debts as they mature or generally not paying his debts as they become
due and such action or petition is consented to or acquiesced in by Maker
or is not dismissed within sixty (60) days of the date upon which it was
brought; or (vi) any material adverse change occurs in Maker's financial
condition or means or ability to pay this Note.
Upon the occurrence of an Event of Default, (a) Holder
shall have all rights and remedies provided in this Note and under
the Uniform Commercial Code in effect in Indiana or other applicable
law; and (b) Holder, at its option, without demand or notice of any
kind, may declare this Note immediately due and payable, whereupon
all outstanding principal and accrued interest shall become
immediately due and payable; provided, however, that upon the
occurrence of any Event of Default described in clause (iv) or (v)
above, this Note, without demand, notice or declaration by Holder
of any kind, shall automatically and immediately become due and
payable.
In case this Note is collected by or through an attorney-
at-law, all costs of such collection incurred by the Holder,
including reasonable attorney's fees, shall be paid by Maker.
Upon the occurrence of an Event of Default hereunder or
whenever Holder in good faith believes that the prospect of
payment of this Note is impaired, Holder, without notice or
demand of any kind, may hold and set off, against any or all
outstanding principal or interest owing under this Note as
Holder may elect, any amount owed to Maker by Holder.
5. Maximum Interest. In no event shall the amount or rate
of interest due and payable under this Note exceed the maximum
amount or rate of interest allowed by applicable law and, in the
event any such excess payment is made by Maker or received by
Holder, such excess sum shall be credited as a payment of
principal (or if no principal shall remain outstanding, shall be
refunded to Maker). It is the express intent hereof that Maker
not pay and Holder not receive, directly or indirectly or in any
manner, interest in excess of that which may be lawfully paid under
applicable law. All interest (including all charges, fees or other
amounts deemed to be interest) which is paid or charged under this
Note shall, to the maximum extent permitted by applicable law, be
amortized, allocated and spread on a pro rata basis throughout the
actual term of this Note and any extension or renewal hereof.
6. Time of the Essence. Time is of the essence of this Note.
Demand, presentment, notice, notice of demand, notice for payment,
protest and notice of dishonor are hereby waived by Maker and any
other person or entity primarily or secondarily liable on this Note.
Holder shall not be deemed to waive any of its rights under this
Note unless such waiver is in writing and signed by Holder. No
delay or omission by Holder in exercising any of its rights under
this Note shall operate as a waiver of such rights and a waiver in
writing on one occasion shall not be construed as a consent to or a
waiver of any right or remedy on any future occasion.
7. Governing Law. All questions concerning the construction,
validity and interpretation of this Note shall be governed by and
construed in accordance with the domestic laws of the State of
Indiana, without giving effect to any choice of law or conflict of
law provision (whether of the State of Indiana or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Indiana. Any disagreement,
dispute or controversy between Maker and Holder with respect to
this Note shall be resolved by arbitration under the commercial
arbitration rules of the American Arbitration Association. Upon
written request of Maker or Holder tendered to the other party,
such arbitration shall be conducted before a panel of three
arbitrators (unless Maker and Holder agree to one arbitrator)
with each side to the dispute selecting one arbitrator and the
arbitrators so selecting the third arbitrator. The arbitration
award shall be final and binding upon Maker and Holder, and
judgment on the award may be entered by and enforced in any court
having competent jurisdiction over the parties and subject matter.
Unless otherwise allocated by the arbitrators, the expenses of the
arbitration proceedings shall be borne equally by the Maker and
Holder. All arbitration proceedings hereunder shall be conducted
in Indianapolis, Indiana.
8. Waiver of Jury Trial. Maker hereby waives, to the fullest
extent permitted by applicable law, any right Maker may have under
any applicable law to a trial by jury with respect to any suit or
legal action which may be commenced by or against Holder concerning
the interpretation, construction, validity, enforcement or
performance of this Note or any other agreement or instrument
executed in connection herewith.
9. Interpretation. Words importing the singular number
hereunder shall include the plural number and vice versa, and
any pronoun used herein shall be deemed to cover all genders.
Without limiting the generality of the foregoing, should more than
one person execute this Note as maker, the word "Maker" as used
herein shall include all such persons collectively and each such
person individually, and each Maker shall be jointly and severally
liable hereunder. "Person" as used herein means any individual,
corporation, partnership, joint venture, limited liability company,
association, joint stock company, trust or other entity, or any
government or any agency or political subdivision thereof. The
word "Holder" as used herein shall include transferees, successors
and assigns of Holder, and all rights of Holder hereunder shall
inure to the benefit of its transferees, successors and assigns.
All obligations of Maker hereunder shall bind Maker's heirs, legal
representatives, successors and assigns.
10. Waivers and Amendments. No waivers, amendments or
modifications of this Note shall be valid unless in writing and
signed by an authorized representative of each of the Holder and
the Maker. No waiver by Holder of any Default or Event of Default
shall operate as a waiver of any other Default or Event of Default
or the same Default or Event of Default on a future occasion.
Neither the failure nor any delay on the part of Holder in exercising
any right, power, or remedy under this Note shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other
right, power or remedy.
Maker waives presentment, protest, notice of dishonor,
demand for payment, notice of intention to accelerate maturity,
notice of acceleration of maturity, notice of sale and all other
notices of any kind (other than any notice expressly required
herein).
11. Assignment. This Note shall inure to the benefit of and be
binding upon the parties, and their respective legal representatives,
successors and assigns. Holder's interests in and rights under
this Note are freely assignable, in whole or in part, by Holder.
Maker shall not assign its rights and interest hereunder without the
prior written consent of Holder, and any attempt by Maker to assign
without Holder's prior written consent is null and void. Any
assignment shall not release Maker from the Obligations.
12. Severability. If any provision of this Note shall be
prohibited or invalid under applicable law, such provision shall be
ineffective but only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Note.
[Remainder of page intentionally left blank]
SIGNED, SEALED AND DELIVERED by the undersigned Maker as
of the day and year first above set forth.
[CORPORATE SEAL] ARL, INC.
By: ___________________________
Name:___________________________
Title:__________________________
Attest
_______________________________
Name:__________________________
Title:_________________________
EXHIBIT C
FORM OF CONTINGENT NOTE
THIS NOTE IS A CONTINGENT NOTE AND NO PAYMENT, WHETHER PRINCIPAL OR
INTEREST, SHALL BE DUE OR PAYABLE UNDER THIS NOTE UNLESS THE
CONDITIONS FOR PAYMENT UNDER THIS NOTE ARE SATISFIED.
CONTINGENT PROMISSORY NOTE
$900,000.00 December ___, 2008
FOR VALUE RECEIVED, the undersigned, US 1 Industries, Inc.,
an Indiana corporation ("Maker"), promises to pay to ARL, Inc., a
Pennsylvania corporation ("Holder"), at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, (or at such other place as Holder may
designate in writing to the undersigned), subject to satisfaction
of the conditions set forth below, the aggregate principal sum of
Nine Hundred Thousand Dollars ($900,000.00) in lawful money of the
United States, bearing interest as calculated in accordance with
Section 3 hereof (the "Interest Rate").
This Contingent Promissory Note (this "Contingent Note") is
made and entered into pursuant to that certain Membership Interest
Purchase Agreement, dated as of December 12, 2008 (the Purchase
Agreement), by and among Maker, Holder, Aficionado Transport, Inc.,
a Pennsylvania corporation, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual
and resident of the State of Pennsylvania. Capitalized terms used
but not defined herein shall have the terms ascribed to such
terms in the Purchase Agreement.
1. Maker's Contingent Obligation to Pay Holder.
(a) Upon the terms and subject to the conditions hereof,
Maker shall be obligated to pay Holder One Hundred Sixty-Eight
Thousand Seven Hundred Fifty and No/100 Dollars ($168,750) (the
"First Contingent Amount"), if the EBITDA of the Acquired Companies
(as defined, accounted for and reconciled, in the event of any
dispute pertaining thereto, in accordance with applicable
provisions of the Purchase Agreement) for the fiscal years
ending December 31, 2009 equals or exceeds the EBITDA Target.
In the event the EBITDA Target pursuant to this Section 1(a) is
satisfied, in addition to payment of the First Contingent Amount,
Fifty-Six Thousand Two Hundred Fifty and No/100 Dollars ($56,250)
(the "First Holdback Amount") shall be held by Maker in a
investment instrument mutually acceptable to Maker and Payee, and
shall be distributed in accordance with Section 2 below. Interest
shall be deemed to have accrued and shall only be payable on the
actual amount of the First Contingent Amount. Interest shall be
deemed to accrue from the date of this Note to, but not including
the date on which payment of the First Contingent Amount is made
and no interest shall be paid prior to such time. Interest on the
First Contingent Amount plus the First Contingent Amount, if any,
shall be due and payable to Holder as provided for in Sections
2.3(d)-(e) of the Purchase Agreement.
(b) Upon the terms and subject to the conditions hereof,
Maker shall be obligated to pay Holder One Hundred Sixty-Eight
Thousand Seven Hundred Fifty and No/100 Dollars ($168,750) (the
"Second Contingent Amount"), if the EBITDA of the Acquired
Companies for the fiscal years ending December 31, 2010 equals
or exceeds the EBITDA Target. In the event the EBITDA Target
pursuant to this Section 1(b) is satisfied, in addition to
payment of the Second Contingent Amount, Fifty-Six Thousand
Two Hundred Fifty and No/100 Dollars ($56,250) (the "Second
Holdback Amount") shall be held by Maker in a investment
instrument mutually acceptable to Maker and Payee, and shall
be distributed in accordance with Section 2 below. Interest
shall be deemed to have accrued and shall only be payable on
the actual amount of the Second Contingent Amount. Interest
shall be deemed to accrue from the date of this Contingent
Note to, but not including the date on which payment of the
Second Contingent Amount is made and no interest shall be
paid prior to such time. Interest on the Second Contingent
Amount plus the Second Contingent Amount, if any, shall be
due and payable to Holder as provided for in Sections
2.3(d)-(e) of the Purchase Agreement.
(c) Upon the terms and subject to the conditions
hereof, Maker shall be obligated to pay Holder One Hundred
Sixty-Eight Thousand Seven Hundred Fifty and No/100 Dollars
($168,750) (the "Third Contingent Amount"), if the EBITDA
of the Acquired Companies for the fiscal years ending
December 31, 2011 equals or exceeds the EBITDA Target. In
the event the EBITDA Target pursuant to this Section 1(c) is
satisfied, in addition to payment of the Third Contingent
Amount, Fifty-Six Thousand Two Hundred Fifty and No/100
Dollars ($56,250) (the "Third Holdback Amount") shall be
held by Maker in a investment instrument mutually acceptable
to Maker and Payee, and shall be distributed in accordance
with Section 2 below. Interest shall be deemed to have accrued
and shall only be payable on the actual amount of the Third
Contingent Amount. Interest shall be deemed to accrue from
the date of this Contingent Note to, but not including the
date on which payment of the Third Contingent Amount is made
and no interest shall be paid prior to such time. Interest on
the Third Contingent Amount plus the Third Contingent Amount,
if any, shall be due and payable to Holder as provided for in
Sections 2.3(d)-(e) of the Purchase Agreement.
(d) Upon the terms and subject to the conditions
hereof, Maker shall be obligated to pay Holder One Hundred
Sixty-Eight Thousand Seven Hundred Fifty and No/100 Dollars
($168,750) (the "Fourth Contingent Amount," together with
payment of the First Contingent Amount, the Second Contingent
Amount and the Third Contingent Amount, the "Contingent
Amounts"), if the EBITDA of the Acquired Companies for the
fiscal years ending December 31, 2012 equals or exceeds the
EBITDA Target. In the event the EBITDA Target pursuant to
this Section 1(d) is satisfied, in addition to payment of the
Fourth Contingent Amount, Fifty-Six Thousand Two Hundred Fifty
and No/100 Dollars ($56,250) (the "Fourth Holdback Amount,"
together with the First Holdback Amount, the Second Holdback
Amount and the Third Holdback Amount, the "Holdback Amounts")
shall be held by Maker in a investment instrument mutually
acceptable to Maker and Payee, and shall be distributed in
accordance with Section 2 below. Interest shall be deemed to
have accrued and shall only be payable on the actual amount of
the Fourth Contingent Amount. Interest shall be deemed to
accrue from the date of this Contingent Note to, but not
including the date on which payment of the Fourth Contingent
Amount is made and no interest shall be paid prior to such
time. Interest on the Fourth Contingent Amount plus the
Fourth Contingent Amount, if any, shall be due and payable
to Holder as provided for in Sections 2.3(d)-(e) of the
Purchase Agreement.
2. Payment of Holdback Amounts. Upon the terms
and subject to the conditions hereof, Maker shall be obligated
to pay Payee the full sum of the Holdback Amount in the amount
of Two Hundred Twenty Five Thousand and No/Dollars ($225,000)
(the "Total Holdback Amount") if the Acquired Companies'
aggregate EBITDA for its 2009, 2010, 2011 and 2012 fiscal years
(the "Aggregate Fiscal Years") exceeds $8,000,000. In the
event aggregate EBITDA of the Acquired Companies for its
Aggregate Fiscal Years does not equal or exceed $8,000,000,
payment of the Total Holdback Amount shall be reduced by an
amount that results in the amount of the actual Earnout Purchase
Price paid pursuant to this Note and Section 2.3(b) of the
Purchase Price being reduced from the amount of the Earnout
Purchase Price that would have been due and payable if aggregate
EBITDA of the Acquired Companies for its Aggregate Fiscal Years
equaled $8,000,000 (which amount is $1,000,000), by such
proportion as is appropriate to reflect the proportion by which
actual aggregate EBITDA for the Acquired Companies' Aggregate
Fiscal Years does not equal $8,000,000. Any portion of the
Holdback Amounts not payable to Payee pursuant to this Note
shall be released to Maker.
By way of example:
Assuming actual EBITDA for the Acquired Companies' Aggregate
Fiscal Years equals $7,000,000 payment of the First Contingent
Amount, the Second Contingent Amount and the Third Contingent
Amount in accordance with Sections 1(a)-(c) of this Note (which
amount equals $506,250), and payment of an Additional Earnout
Payment equal to $200,000, the Holdback Amount due and payable to
Payee shall equal $168,750 (or (.875 * $1,000,000) - $706,250)).
In such event, the remaining $56,250 of the Holdback Amount
($225,000-168,752) would be released to Maker.
Interest shall be deemed to have accrued and shall only be
payable on the actual amount of the Holdback Amount paid to
Payee. Interest shall be deemed to accrue from the date of this
Contingent Note to, but not including the date on which payment
of the Holdback Amount is made and no interest shall be paid
prior to such time. Interest on the Total Holdback Amount plus
the Total Holdback Amount, if any, shall be due and payable to
Holder as provided for in Sections 2.3(d)-(e) of the Purchase
Agreement.
3. Interest Computation.
(a) Interest on the principal amount of any
Contingent Payments due and payable shall be at a variable rate
equal to the interest rate paid by Maker under its Amended and
Restated Loan Agreement with US Bank (the "Loan Agreement") from
time to time, computed on the basis of a year consisting of 360
days and charged for the actual number of days during the period
for which interest is being charged. In computing interest, the
date of payment shall be excluded. Any changes in the Interest
Rate as a result of changes in the interest rate paid by Maker
under the Loan Agreement shall become effective as provided for
in the Loan Agreement.
(b) Interest on the principal amount of any
Holdback Amount shall be at the rate payable under the investment
instrument in which the Holdback Amounts are placed pursuant to
Section 1 of this Note.
4. Non-Negotiability. This Note is non-negotiable.
5. Subordination. Holder hereby acknowledges,
understands and agrees that Holder's rights and remedies hereunder
are subordinate to the rights of any institutional lenders who
provide debt financing to Maker or its subsidiaries.
6. Prepayment. Maker shall be entitled to prepay
this Contingent Note, in whole or in part, at any time without
penalty or premium and without payment of unearned interest.
7. Default; Remedies. In the event that any Event
of Default (as defined below) occurs and is continuing, then,
and in any such event, Holder shall have, in addition to any
and all rights, powers, remedies, and recourse (collectively,
"Remedies") available or permitted to Holder at law or in equity,
the right and option to declare the unpaid balance of Contingent
Amounts hereof, together with all accrued and unpaid interest and
costs of collection (including reasonable attorneys' fees), if any,
thereon, immediately due and payable without notice (except as
expressly provided herein), or demand or presentment for payment;
provided that upon the occurrence of an Event of Default described
in clause (ii) of the definition of Event of Default, all
obligations outstanding hereunder, including, without limitation,
Contingent Amounts, and interest, automatically shall become due
and payable without any declaration, notice or other action by the
Holder or Maker. The Remedies available or permitted to Holder
under this Note, at law, in equity, or otherwise shall be
cumulative and concurrent, and not exclusive; and the exercise
of any such Remedy shall not be deemed a waiver of the right to
exercise at the same time or at any time thereafter any other
such Remedies. No delay or omission on the part of Payee in
exercising any Remedy available or permitted to Payee upon the
occurrence and continuance of any Event of Default shall operate
as a waiver or preclude the exercise of said Remedy, or any other
such Remedies, during the existence of such Event of Default or
upon the occurrence and continuance of any subsequent Event of
Default.
The term "Event of Default" shall mean any of the following
events: (i) Maker shall fail to pay ant Contingent Payment or
interest in full when due; (ii) Maker shall commence proceedings
in any court under the United States Bankruptcy Code, or any
other debtors' relief or insolvency act, whether state or
federal, or any other person shall commence such proceedings
against Maker, and the same shall not be stayed or dismissed
within sixty (60) days; (iii) Maker shall in one or a series
of transactions (A) sell all or substantially all of Maker's
assets or (B) merge or otherwise be combined with any other
entity such that the equity holders of Maker immediately prior
to such transaction or series of transactions shall hold less
than 50% of the voting equity of the surviving entity after
such transaction or transactions are consummated or (C) have
more than 50% of Maker's outstanding equity acquired by any
person or group other than equity holders of Maker prior to
the consummation of such transaction or series of transactions.
8. Right of Offset; Satisfaction. Any amounts
owing to Maker by Holder may be offset against any amounts due
Holder under this Contingent Note.
9. General Provisions.
(a) Notices. All notices, requests,
demands and other communications hereunder shall be delivered
in accordance with the notice provisions set forth in the
Purchase Agreement.
(b) Successors and Assigns. All of the
terms and provisions of this Note shall bind and inure to the
benefit of the respective successors, assigns, heirs,
administrators or other legal representatives of Maker and
Holder to the extent provided for in the Purchase Agreement.
(c) Non-Waiver of Remedies. No delay or
failure on the part of Holder or Maker in the exercise of any
right or remedy shall operate as a waiver thereof, and no
single or partial exercise by Holder or Maker of any right or
remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy.
(d) Waiver of Presentment, etc. Maker
hereby waives presentment, demand, notice of dishonor, protests
and all other notices other than the written notice required to
cause a default to exist.
(e) Amendment. This Note and any of its
terms may be altered only by a written instrument signed by
Maker and Holder.
(f) Headings, Construction. The
descriptive section headings in this Note are for
convenience only and shall not be construed as part hereof.
If any of the provisions of this Note shall be unlawful,
void or for any reason unenforceable, they shall be deemed
separable from, and shall in no way affect the validity or
enforceability of, the remaining provisions of this Note.
(g) Governing Law. This Contingent Note
and the rights and obligations of the parties hereto shall be
governed by and construed in accordance with the laws of the
State of Indiana.
IN WITNESS WHEREOF, Maker has executed, or has
caused this Contingent Note to be executed in its corporate
name, by and through its duly authorized officer, as of the
day and year first above written.
US 1 Industries, Inc., an Indiana corporation
By:
Title:
EXHIBIT D
MATTERS TO BE COVERED BY SELLER LEGAL OPINION
1. Each of Seller and AFT is a corporation duly
incorporated, validly existing, and in good standing under the
laws of the State of Pennsylvania and is duly qualified to do
business and in good standing under the laws of the State of
Indiana.
2. Each of ARL LLC and AFT LLC is a limited liability
company duly formed, validly existing, and in good standing under
the laws of the State of Delaware, following the consummation of
all transactions contemplated under the Purchase Agreement, will
be duly qualified to do business and in good standing under the
State of Pennsylvania and the State of Indiana.
3. Each of Seller, AFT, ARL LLC and AFT LLC (each,
an "ARL Entity") has the power and authority to execute and
deliver the Purchase Agreement and the Transaction Documents
to which such ARL Entity is a party and to perform its
obligations thereunder and to consummate the transactions
contemplated thereby.
4. Each ARL Entity has duly authorized the
execution and delivery of the Purchase Agreement and the
Transaction Documents to which such ARL Entity is a party and
all performance by it thereunder and has duly executed and
delivered the Purchase Agreement and each of the Transaction
Documents.
5. The Purchase Agreement and each of the
Transaction Documents to which each ARL Entity is a party
constitutes a legal, valid, and binding obligation of such ARL
Entity and is enforceable against such ARL Entity in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws of general
applicability relating to or affecting creditors' rights and to
general equity principles, including, without limitation,
concepts of materiality, reasonableness, good faith and fair
dealing, and the possible unavailability of specific performance
or injunctive relief regardless of whether considered in a
proceeding in equity or at law.
6. Neither the execution nor the delivery of the
Purchase Agreement and the Transaction Documents by any ARL
Entity nor the performance of such ARL Entity's obligations
thereunder has violated or will violate: (i) any provision of
the Governing Documents of such ARL Entity; (ii) assuming
consistency in all respects with applicable provisions and
requirements of Indiana law for purposes hereof, the DGCL,
the DLLCA or any Pennsylvania or any federal statute, law,
rule or regulation known to us to which any ARL Entity is
subject, or (iii) to our knowledge, any arbitration award,
order, writ, judgment, or decree of any court, arbitration
panel, or government agency or authority to which such ARL
Entity is subject.
7. Except as contemplated in the Purchase
Agreement, including, but not limited to, the requirement to
obtain the Governmental Authorizations described in Schedule
4.20(a) thereof, no consent, approval, order, license, or
authorization by, and no filing, recording, or registration
with, any governmental agency, authority, or instrumentality
is required on the part of any ARL Entity for the execution
and delivery of the Purchase Agreement or the Transaction
Documents or the consummation by any ARL Entity of the
transactions contemplated thereby, except for those the
failure to obtain or make which would not have a material
adverse effect on the ability of each ARL Entity to
consummate such transactions.
8. Seller has transferred to ARL LLC all of the
right, title, and interest of Seller in and to all of the
assets of Seller and the Business more particularly
described in the Purchase Agreement, and to our knowledge,
such assets are free and clear of any liens, encumbrances,
and claims of third parties.
9. AFT has transferred to AFT LLC all of the
right, title, and interest of Seller in and to all of the
assets of Seller and the Business more particularly
described in the Purchase Agreement, and to our knowledge,
such assets are free and clear of any liens, encumbrances,
and claims of third parties.
EXHIBIT E
REFINANCED CREDIT FACILITIES
-All amounts outstanding pursuant to the Revolving Credit
Agreement, dated May 25, 2006, as amended on December 21,
2006, as further amended on November 16, 2007, between ARL
Network, Inc. ("ARL Network"), and Marquette Funding, Inc.
n/k/a Marquette Transportation Finance, Inc. ("Marquette"),
as evidenced by the following notes made in favor of
Marquette, each of which is signed by ARL Network and the
following entities in the amounts indicated: (1) Revolving
Note C in the amount of $1,700,000 by Aficionado Transport,
Inc., and (2) Revolving Note in the amount of $10,000,000
by ARL Network, which replaces, Revolving Note F in the
amount of $9,000,000 by ARL Network and ARL, Inc.
-All amounts outstanding pursuant to the $1,000,000 SBA Loan,
issued pursuant to a Note, dated June 18, 2008, by ARL in
favor of Enterprise Bank, maturing on June 18, 2015, as
amended.
EXHIBIT F
FORM OF GUARANTY
PERSONAL GUARANTY
This Personal Guaranty (this "Guaranty") is issued as
of the ___ day of December, 2008, by ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
("Guarantor"), an individual and resident of the State of
Pennsylvania, in favor of US 1 Industries, Inc., an Indiana
corporation ("Purchaser"). Capitalized terms used but not
defined herein shall have the meanings ascribed to such
terms in the Purchase Agreement (defined below).
RECITALS
A. Purchaser, Guarantor, ARL, Inc., a
Pennsylvania corporation ("Seller"), and Aficionado
Transport, Inc., a Pennsylvania corporation, are
concurrently with the execution of this Guaranty entering
into that certain Membership Interest Purchase Agreement
dated as of the date hereof (the "Purchase Agreement"),
pursuant to which Seller will to sell to Purchaser, and
Purchaser will purchase from Seller, 60% of the membership
interests of ARL Transport LLC, a Delaware limited liability
company (the "Company").
B. Guarantor is the direct owner of 100% of the
outstanding equity interests in Seller, subject to the terms
and conditions of that certain Stock Purchase Agreement,
dated October 1, 2001, as amended (the "SPA") by and among
Guarantor, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Seller, and K&C Sales, Inc..
Guarantor is the direct owner of 100% of the outstanding
equity interests in AFT.
C. In order to induce Purchaser to enter into
the Purchase Agreement and other Transaction Documents,
Guarantor hereby agrees as follows:
1. Guaranty of Indemnity Obligations.
(a) Guaranty. Guarantor acknowledges that he is
fully aware of the terms and conditions of the Purchase
Agreement and the other Transaction Documents in effect
on the date hereof, and hereby irrevocably and
unconditionally guarantees to Purchaser, as primary
obligor and not merely as surety, without offset,
abatement, deferment, or deduction, Seller's payment
of all its payment obligations under Section 9 of the
Purchase Agreement (the "Indemnity Obligations"). If
Seller fails to pay any Indemnity Obligation when it
becomes due and payable, Guarantor will promptly and
fully pay such Indemnity Obligation.
(b) Absolute Guaranty. Guarantor's obligations
under this Guaranty shall be absolute, continuing, and
unconditional, shall remain in full force and effect
until irrevocable payment in full of all of the Indemnity
Obligations, and shall not be affected by any action taken
or not taken by Purchaser, by any lack of prior enforcement
or retention of any rights against Seller or Guarantor, by
any illegality, unenforceability, or invalidity of the
Indemnity Obligations or the Transaction Documents, by any
other guaranty or other obligations, or by any other
circumstance or condition (whether or not Guarantor or the
Acquired Companies have any knowledge or notice thereof),
including: (1) any termination, amendment, modification, or
other change in, or supplement to, any of the Transaction
Documents, or any furnishing or acceptance of additional
security, or release of any security, for the obligations
of Seller under the Transaction Documents; (2) any failure,
omission, or delay on the part of any Person to conform or
comply with any term of any Transaction Document; (3) any
waiver of the payment, performance, or observance of any
of the obligations, conditions, covenants, or agreements
contained in any Transaction Document or any other waiver,
consent, extension, indulgence, compromise, settlement,
release, or other action or inaction under or in respect
of any Transaction Document, or any exercise or non-
exercise of any right or remedy under any Transaction
Document or any obligation or liability of Purchaser or
Seller, or any exercise or non-exercise of any right,
remedy, power, or privilege under or in respect of any
Transaction Document or any such obligation or
liability; (4) any extension of time for payment or
performance of any Indemnity Obligation; (5) any
failure, omission, or delay on the part of Purchaser
to enforce, assert, or exercise any right, power, or
remedy conferred on it in connection with any
Transaction Document, or any other action on the
part of Purchaser; (7) any voluntary or involuntary
bankruptcy, insolvency, assignment for the benefit
of creditors, receivership, conservatorship,
custodianship, liquidation, marshalling of assets and
liabilities, or similar proceeding with respect to
Purchaser, Guarantor, or any other Person or any of
their respective properties or creditors, or the
disaffirmance in whole or in part of any of the
Transaction Documents in any such proceeding, or any
action taken by any trustee or receiver or by any
court in any such proceeding; (8) any limitation on
Purchaser's liability or obligations (or the
liabilities and obligations of any other Person) or
any discharge, termination, cancellation, frustration,
irregularity, invalidity, or unenforceability, in whole
or in part, of any of the Transaction Documents; (9)
any merger or consolidation of Purchaser into or with
any other corporation, or any sale, lease, or other
transfer of any of the assets of Purchaser to any other
Person or any change in the ownership of Purchaser or in
the control of Purchaser; (10) to the extent permitted
by law, any release or discharge, by operation of law,
of Guarantor from the performance or observance of any
obligation, covenant, or agreement contained in this
Guaranty; and (12) any other condition or circumstance
which might otherwise constitute a legal or equitable
discharge, release, or defense of a surety or guarantor,
or which might otherwise limit recourse against Guarantor,
including any discharge, release, defense, or limitation
arising out of any laws of the United States of America or
any state thereof or any other Government Authority having
authority over the same which would exempt, modify, or
delay the due or punctual payment and performance of the
obligations of Guarantor hereunder. Subject to paragraph
(e) below, the obligations of Guarantor hereunder are not
dischargeable except by payment. No failure or delay in
exercising any right under this Guaranty shall operate as
a waiver thereof, nor shall any single or partial exercise
of any such right preclude any other or further exercise
thereof or the exercise of any other right of Seller under
this Guaranty or the Transaction Documents.
(c) Guaranty of Payment. This Guaranty is a
continuing guaranty of payment, and Guarantor waives any
right to require that any action against Purchaser or any
other Person or any collateral or security be taken or
exhausted before action is taken against Guarantor. Purchaser
shall not be required (1) to file suit or to proceed to
obtain or assert a claim against Seller for the Indemnity
Obligations, (2) to make any effort at collection of the
Indemnity Obligations from Seller, (3) to foreclose against
or seek to realize upon any present or future security for
the Indemnity Obligations, (4) to file suit or to proceed
to obtain or assert a claim for personal judgment against
any other Person liable for the Indemnity Obligations, or
to make any effort at collecting the Indemnity Obligations
from any such other Person, or to exercise or assert any
other right or remedy to which the Purchaser is or becomes
entitled in connection with the Indemnity Obligations or any
security or other guaranty therefore, or (5) to assert or to
file any claim against the assets of Seller or any other
guarantor or any other Person liable for the Indemnity
Obligations, or any part thereof, either before or as a
condition to enforcing Guarantor's liability under this
Guaranty or to require Guarantor to pay the Indemnity
Obligations at any time thereafter.
(d) Waiver. Guarantor hereby waives diligence,
presentment, demand, protest, and notice of any kind whatsoever
with respect to this Guaranty or the Indemnity Obligations,
including (1) notice of acceptance of this Guaranty or notice
of non-payment or non-performance of any Indemnity Obligations,
and (2) any other circumstance whatsoever which might otherwise
constitute a legal or equitable discharge, release, or defense
of a guarantor or surety or which might otherwise limit
recourse against Guarantor.
(e) Termination. Guarantor's obligations under this
Section 1 shall terminate (subject to reinstatement under
Section 3) when the Indemnity Obligations have been
irrevocably paid in full.
2. Rights Limited to Seller. This Guaranty shall not
create any right in any Person except the Purchaser (and its
permitted transferees), and shall not be construed in any respect
to be a contract in whole or in part for the benefit of any other
Person.
3. Bankruptcy, etc. If at any time all or any part of any
payment applied to the Indemnity Obligations is or must be rescinded
or returned for any reason whatsoever, such Indemnity Obligations
shall be deemed to have been unfulfilled and continuing unsatisfied
for purposes of this Guaranty, to the extent rescinded or returned,
and this Guaranty shall continue to be effective or be reinstated, as
the case may be, as to such Indemnity Obligations all as though such
payment had not been made.
4. Subrogation. Guarantor hereby irrevocably and
unconditionally waives any and all rights it may have or obtain,
by reason of the performance of the terms and provisions of this
Guaranty, to be subrogated to the rights and privileges of
Purchaser against Seller, or against any collateral security or
guaranty or right of offset held by Seller for the payment of the
Indemnity Obligations pursuant to the Purchase Agreement. No
payment or performance hereunder by Guarantor shall give rise to
any claim of Guarantor against the Acquired Companies.
5. Amendments and Other Actions. Seller may, in its
discretion, and without affecting Guarantor's absolute,
continuing, and unconditional liability under this Guaranty,
agree to amendments, modifications, or supplements to the
Purchase Agreement, or the other Transaction Documents, give or
withhold consents, waivers, or approvals, and exercise or
refrain from exercising rights under the Purchase Agreement or
the other Transaction Documents.
6. Assignment. Purchaser may at any time sell, assign,
transfer, or otherwise dispose of its interest in all or any
part of this Guaranty.
7. Written Changes Only. No amendment, waiver, or consent
under the terms of this Guaranty shall be effective unless
evidenced by an instrument in writing signed by Guarantor and
Purchaser and dated subsequent to the date hereof.
8. Payments. All payments by Guarantor hereunder shall be
made in immediately available funds to Purchaser in accordance with
Section 2.4 of the Purchase Agreement. All payments hereunder shall
be made free and clear of, and without deduction or withholding for
or on account of, any Taxes to the extent that any such Taxes
would reduce the amount that Purchaser otherwise would have
received had Purchaser made such payment. If any Taxes must be
deducted or withheld from any payment hereunder, Guarantor shall
increase the amount paid so that Seller receives the full amount of
the payment provided for in this Guaranty on an After-Tax Basis.
9. Representations, Warranties, and Covenants. Guarantor
hereby represents, warrants, and covenants to Purchaser as follows:
(a) Authorization; Compliance. Guarantor has the power and
authority to issue this Guaranty. This Guaranty has been duly
authorized by all necessary action on Guarantor's part, and does
not require any approval or consent of any trustee or holders of
any indebtedness or obligations of Guarantor or of any other
Person, except such as have been obtained, and Guarantor has
duly executed and delivered this Guaranty. Guarantor's execution,
delivery, and performance of this Guaranty do not contravene any
law, judgment, decree, governmental rule, regulation, or order
applicable to or binding on Guarantor, and do not contravene,
result in any breach of, or constitute any default or result in
the creation of any Lien under any indenture, mortgage, security
agreement, deed of trust, or other agreement or instrument to
which Guarantor is a party.
(b) Approvals. Neither Guarantor's execution and
delivery of this Guaranty, nor Guarantor's consummation of any
of the transactions contemplated hereby, requires the consent or
approval of, giving of notice (other than subsequent reporting
requirements) to, registration with, or taking of any other action
in respect of, any Government Body.
(c) Validity of Guaranty. This Guaranty has been duly
entered into, executed and delivered and constitutes a legal,
valid, and binding obligation of Guarantor. Guarantor's obligations
under this Guaranty rank, and until discharged in full will continue
to rank, in right of payment and security, equally and ratably in
all respects with all Guarantor's present and future unsecured and
unsubordinated indebtedness for borrowed money.
(d) Litigation. There are no pending or, to Guarantor's
knowledge, threatened actions or proceedings before any court or
administrative agency of the United States of America that may be
expected to have a materially adverse effect on Guarantor's
financial condition or ability to perform its obligations under
this Guaranty.
(e) Notice of Proceedings and Other Events.
Guarantor will promptly notify Purchaser in writing of any
proceeding before any Government Body, or any other matters,
that could reasonably be expected to cause a materially adverse
change with respect to Guarantor.
10. Governing Law; Jurisdiction.
This Guaranty is governed by and shall be construed in
accordance with the laws of the State of Indiana. Guarantor and
Purchaser each irrevocably submit to the exclusive jurisdiction
of the state court for the State of Indiana located in ▇▇▇▇▇▇
County to settle any suits, actions, or other proceedings
arising out of this Guaranty.
11. Integration; Successors and Assigns. This Guaranty
constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, between
Guarantor and Purchaser, with respect to the subject matter
hereof. This Guaranty shall bind Guarantor's successors and
assigns, and shall benefit, and be enforceable by, Purchaser
and its successors and assigns.
12. Notices. All notices, requests, demands and other
communications hereunder shall be delivered in accordance with
the notice provisions set forth in the Purchase Agreement.
13. Severability. If any provision hereof is held
invalid, illegal, or unenforceable in any respect in any
jurisdiction, then, to the extent permitted by Law, (a) all
other provisions hereof shall remain in full force and effect
in such jurisdiction, and (b) such invalidity, illegality, or
unenforceability shall not affect the validity, legality, or
enforceability of such provision in any other jurisdiction. If,
however, any Law pursuant to which such provisions are held
invalid, illegal, or unenforceable may be waived, Purchaser
and Guarantor hereby waive such Law to the full extent permitted,
to the end that this Guaranty shall be deemed to be a valid and
binding agreement in all respects, enforceable in accordance
with its terms.
14. Costs and Expenses. Guarantor agrees to pay to
Purchaser any and all reasonable expenses (including reasonable
legal fees and expenses) incurred by Purchaser in enforcing
this Guaranty.
15. Performance. Guarantor's performance of any or all
of the Indemnity Obligations shall, for all purposes of the
Transaction Documents, constitute performance by Seller of
such Indemnity Obligations.
IN WITNESS WHEREOF, Guarantor and Purchaser have executed this
Guaranty Agreement as of the date written above.
"Guarantor"
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
"Purchaser"
US 1 INDUSTRIES, INC.
By:_______________________________
Name:_____________________________
Its:______________________________
EXHIBIT G
SCHEDULE OF ASSETS TRANSFERRED FROM SELLER TO THE COMPANY
[attached]
EXHIBIT H
SCHEDULE OF ASSETS TRANSFERRED FROM AFT TO AFT LLC
[attached]