UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
December 31, 1997
Date of Report (Date of earliest event reported)
CONSOLIDATED DELIVERY & LOGISTICS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-26954 22-3350958
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
380 Allwood Road, Clifton, New Jersey 07012
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (973) 471-1005
NOT APPLICABLE
(Former name or former address, if changed since last report.)
<PAGE>
ITEM 2. Acquisition or Disposition of Assets
On December 31, 1997, Consolidated Delivery & Logistics, Inc.
("CDL") entered into an agreement (the "Asset Purchase Agreement") with its
subsidiary, Sureway Logistics Corporation ("Logistics") and Mimatar Corporation
("Mimitar"), providing for the sale of certain assets of Logistics to Mimitar.
This sale disposes of the previously disclosed discontinued operations of CDL's
fulfillment and direct mail business. Under the terms of the Asset Purchase
Agreement, the assets included Logistics' customer list, prepaid expenses,
advance rentals, security deposits, manufacturing, warehouse, computer and other
equipment, license to use certain of Logistics' intellectual property assets,
assumption of equipment leases and assignment to and assumption by Mimitar of a
real property warehouse lease covering Logistic's principal place of business
(the "Facility Lease").
The purchase price for the assets was $850,000 with $125,000 in
cash and the remainder in the form of a promissory note (the "Note"). The Note
will bear interest at the rate of 6% per annum. During 1998 interest only will
be payable monthly. Commencing February 1, 1999 the note will be paid in equal
monthly installments of $14,016 including principal and interest through January
1, 2004. The note is collateralized by a security interest in Mimitar's accounts
receivable, equipment and general intangibles. The security interest is
subordinate to the interest of Mimitar's majority shareholder. The purchase
price under the Asset Purchase Agreement was determined by arm's length
negotiations between the parties based on the market value of the assets
purchased and sold.
The Asset Purchase Agreement requires that Logistics obtain the
formal written consent of the landlord to the assignment of the Facility Lease
to Mimitar on or before January 6, 1998. Landlord consent is expected but has
not been obtained. The Asset Purchase Agreement may be terminated by Mimitar if
landlord consent is not obtained, however if CDL elects to litigate the landlord
consent issue the Asset Purchase Agreement will continue under terms to be
mutually agreed between CDL and Mimitar.
The description above of the Asset Purchase Agreement and the
Note is a summary and does not purport to be complete. Reference should be made
to the copies of such documents filed as exhibits to this report for a complete
description of their terms.
ITEM 7. Financial Statements and Exhibits
b. Pro Forma Information
Consolidated Delivery & Logistics, Inc. and Subsidiaries
Introductory Notes to Unaudited Pro Forma Consolidated Financial Statements
The following pro forma condensed consolidated balance sheet
as of September 30, 1997, and the pro forma condensed consolidated statement of
continuing operations for the nine month period then ended and the pro forma
consolidated statement of continuing operations for year ended December 31, 1996
give effect to CDL's sale of certain assets of Logistics. The adjustments
related to the pro forma condensed consolidated balance sheet assume the
transaction was consummated at September 30, 1997, while the adjustments to the
pro forma consolidated statement of operations assume the transaction was
consummated on January 1, 1996. The final sale occurred on December 31, 1997.
The pro forma condensed consolidated balance sheet and pro
forma condensed consolidated statement of continuing operations for the nine
months ended September 30, 1997 are based on the historical financial statements
of CDL which had previously been reclassified to present the discontinued
operations of Logistics separately. Accordingly, the only pro forma adjustments
required are to reflect the sale of certain assets of Logistics and the
associated interest income and net interest savings. The pro forma consolidated
statement of continuing operations for the year ended December 31, 1996 is based
on the historical statements of CDL, which were not reclassified to present the
discontinued operations of Logistics. The pro forma adjustments reflect the
reclassification of the discontinued operations, the sale of certain assets of
Logistics and the associated interest income and net interest savings.
The unaudited pro forma financial statements are presented
for informational purposes only and do not purport to present what the condensed
consolidated balance sheet would have been had the sale, in fact, occurred on
September 30, 1997 or what the consolidated statements of operations for the
nine months ended September 30, 1997 or for the year ended December 31, 1996
would have been had the sale, in fact, occurred on January 1, 1996.
<PAGE>
CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES
UNAUDITED PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(In thousands except share information)
<TABLE>
<S> <C> <C> <C>
CDL Pro Forma
Consolidated Pro Forma CDL
Pre-Sale Adjustments Consolidated
-------------------- ----------------- -----------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $1,270 $- $1,270
Accounts receivable, net 22,348 - 22,348
Prepaid expenses and other current assets 2,819 - 2,819
Net assets of discontinued operations 1,989 (830) (1) 1,159
-------------------- ----------------- -----------------
Total current assets 28,426 (830) 27,596
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net 5,949 - 5,949
OTHER ASSETS 4,000 725 (4) 4,725
==================== ================= =================
Total assets $38,375 $ (105) $38,270
==================== ================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $6,893 $(125) (3) $6,768
Current maturities of long-term debt 3,071 - 3,071
Accounts payable and accrued liabilities 14,977 8 (2) 14,985
-------------------- ----------------- -----------------
Total current liabilities 24,941 (117) 24,824
LONG-TERM DEBT 2,871 - 2,871
OTHER LONG-TERM LIABILITIES 2,051 - 2,051
-------------------- ----------------- -----------------
Total liabilities 29,863 (117) 29,746
-------------------- ----------------- -----------------
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; 2,000,000 shares
authorized; no shares issued and outstanding
- - -
Common stock, $.001 par value; 30,000,000 shares authorized; 6,658,551 shares
issued and outstanding at September 30, 1997, respectively
7 - 7
Additional paid-in capital 9,001 - 9,001
Accumulated deficit (496) 12 (5) (484)
-------------------- ----------------- -----------------
Total Stockholders' Equity 8,512 12 8,524
-------------------- ----------------- -----------------
Total Liabilities and Stockholders' Equity $38,375 $ (105) $38,270
==================== ================= =================
</TABLE>
The accompanying explanatory notes are an integral part of
these consolidated statements.
<PAGE>
CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(In thousands, except per share data)
<TABLE>
<S> <C> <C> <C>
CDL Pro Forma
Consolidated Pro Forma CDL
Pre-Sale Adjustments Consolidated
---------------- ---------------- ----------------
REVENUES $126,368 $ - $126,368
Cost of Revenues 96,758 - 96,758
---------------- ---------------- ----------------
GROSS PROFIT 29,610 - 29,610
Selling, General, &
Administrative Expenses 28,409 - 28,409
---------------- ---------------- ----------------
OPERATING INCOME 1,201 - 1,201
OTHER (INCOME) EXPENSE:
Gain on Sale of Subsidiary, net (816) - (816)
Other expense (income), net (209) (31) (6) (240)
Interest expense 836 (18) (7) 818
---------------- ---------------- ----------------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 1,390 49 1,439
Provision for Income Taxes 556 20 (8) 576
---------------- ---------------- ----------------
NET INCOME FROM CONTINUING
OPERATIONS $834 $29 $863
================ ================ ================
NET INCOME (LOSS) PER SHARE
FROM CONTINUING OPERATIONS $0.13 $ - $0.13
================ ================ ================
AVERAGE SHARES OUTSTANDING USED TO CALCULATE
INCOME (LOSS) PER SHARE
6,674 6,674 6,674
================ ================ ================
</TABLE>
The accompanying explanatory notes are an integral part of
these consolidated statements.
<PAGE>
CONSOLIDATED DELIVERY & LOGISTICS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CONTINUING OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(In thousands, except share data)
<TABLE>
<S> <C> <C> <C> <C>
CDL Discontinued Other Pro Forma
Consolidated Operations Pro Forma CDL
Pre-Sale Adjustments Adjustments Consolidated
----------------- ---------------- ---------------- ----------------
REVENUES $171,049 ($7,959) $- $163,090
Cost of Revenues 120,768 (5,211) 6,974 (9) 122,531
----------------- ---------------- ---------------- ----------------
GROSS PROFIT 50,281 (2,748) (6,974) 40,559
Selling, General, &
Administrative Expenses 51,464 (2,463) (6,974) (9) 42,027
----------------- ---------------- ---------------- ----------------
OPERATING INCOME (LOSS) (1,183) (285) - (1,468)
OTHER (INCOME) EXPENSE:
Interest income (89) - (44) (6) (133)
Interest expense 805 - (12) (7) 793
Other income, net (372) 1 - (371)
----------------- ---------------- ---------------- ----------------
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES (1,527) (286) 56 (1,757)
Provision for (benefit from)
income (844) (114) 22 (8) (936)
taxes
----------------- ---------------- ---------------- ----------------
NET INCOME (LOSS) FROM
CONTINUING OPERATIONS $(683) $(172) $34 $(821)
================= ================ ================ ================
INCOME (LOSS) PER SHARE
FROM CONTINUING OPERATIONS
($0.10) ($0.03) $0.01 ($0.12)
================= ================ ================ ================
AVERAGE SHARES OUTSTANDING
USED TO CALCULATE INCOME
(LOSS) PER SHARE
6,677,546 6,677,546
6,677,546 6,677,546
================= ================ ================ ================
</TABLE>
The accompanying explanatory notes are an integral part of
these consolidated statements.
<PAGE>
Consolidated Delivery & Logistics, Inc. and Subsidiaries
Explanatory Notes to Unaudited Pro Forma Consolidated Financial Statements
(1) Record sale of certain assets of Logistics.
(2) Record estimated income tax liability on the gain on the sale.
(3) Reflect the use of the proceeds from the sale to reduce outstanding
borrowings on the line of credit.
(4) Record promissory note receivable from the sale.
(5) Estimated retained earnings impact of the sale.
(6) Record interest income at 6% per annum earned on the note receivable from
the sale.
(7) Interest expense calculated at approximately 9%, representing CDL's
revised debt structure.
(8) Income tax effect of adjustments (6) and (7).
(9) Reclassification made to the 1996 financial statements in order to conform
to the 1997 presentation.
<PAGE>
c. Exhibits
10.1 Asset Purchase Agreement dated December 31, 1997 by and among
Consolidated Delivery & Logistics, Inc., Mimitar Corporation and
Sureway Logistics Corporation.
10.2 Promissory Note dated December 31, 1997 by and between Mimitar
Corporation and Sureway Logistics Corporation.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: January 15, 1998 CONSOLIDATED DELIVERY & LOGISTICS, INC.
(Registrant)
By:___________________________
Joseph G. Wojak
Executive Vice President, Chief
Financial Officer, Treasurer
and Secretary
(Principal Financial and
Accounting Officer)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: January 15, 1998 CONSOLIDATED DELIVERY & LOGISTICS, INC.
(Registrant)
By: /s/ Joseph G. Wojak
Joseph G. Wojak
Executive Vice President, Chief
Financial Officer, Treasurer
and Secretary
(Principal Financial and
Accounting Officer)
<PAGE>
ASSET PURCHASE AGREEMENT
DATED
DECEMBER 31, 1997
BY AND AMONG
PURCHASER
AND
SUREWAY LOGISTICS CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - Certain Definitions 1
Section 1.1. Certain Definitions 1
Section 1.2. Interpretation 4
ARTICLE II - Purchase and Sale of Assets; Assumption of Liabilities 4
Section 2.1. Purchase and Sale of Assets and Assumption of Equipment Lease 4
Section 2.2. Purchase Price 4
Section 2.3.1. Payment of Purchase Price 4
Section 2.3.2. Promissory Note 5
Section 2.3.3. Grant of a Security Interest 5
Section 2.4. Security Agreement 5
Section 2.5.1. Assumption of Allwood Road 5
Section 2.5.2. Sublease of Portion of Allwood Road Lease 5
Section 2.5.3. Surrender of Monhegan Lease 5
Section 2.6. Secured Creditor 5
Section 2.7. Allocation of the Purchase Price 6
Section 2.8. Closing 6
Section 2.9. Failure to Obtain Consent 6
ARTICLE III - Representations and Warranties of the Seller and the Principals 6
Section 3.1. Financial Representation as to Value of Purchased Assets 6
Section 3.2. The Purchased Assets. 6
Section 3.3. Personal Property 6
Section 3.4. Real Property 7
Section 3.4.1. Lease Description 7
Section 3.5. Employment Matters; No Collective Bargaining Agreement 7
Section 3.6. Material Customers, Contracts and Commitments 7
Section 3.7. Litigation 8
Section 3.8. Brokers 8
Section 3.9. Organization and Qualification of the Seller 8
Section 3.10. Authorization 8
Section 3.11. Non-contravention 8
Section 3.12. No Consents 8
Section 3.13. Insurance 9
Section 3.14. Transition Assistance 9
ARTICLE IV - Representations and Warranties of the Purchaser 9
Section 4.1. Organization 9
Section 4.2. Authorization 9
Section 4.3. Non-contravention 9
Section 4.4. No Consents 9
Section 4.5. Brokers 9
Section 4.6. Personal Property 10
Section 4.7. Collection Assistance 10
ARTICLE V - Covenants and Agreements 10
Section 5.1. Pre-Closing Liabilities and Receivables 10
Section 5.2. Post Closing Liabilities and of Accounts Receivable 10
Section 5.3. Employment Matters 10
Section 5.4. Transfer and Property Taxes 10
Section 5.5. Closing Documents 11
Section 5.6. Real Estate Tax Appeal 11
Section 5.7. Prior Sales Taxes 11
ARTICLE VI - Conditions to Closing 11
Section 6.1. Mutual Condition 11
Section 6.2. Conditions to the Purchaser's Obligations 11
Section 6.2.1. Purchaser's Financial Acknowledgment 12
Section 6.3. Conditions to the Seller's Obligations 12
ARTICLE VII -Indemnification 13
Section 7.1. Survival of Representations and Warranties 13
Section 7.2. Indemnification 14
Section 7.3. Procedures for Third Party Claims 14
Section 7.4. Procedures for Inter-Party Claims 15
Section 7.5. Post Closing Corporation 15
ARTICLE VIII - Default 15
Section 8.1. Default by the Purchaser 15
ARTICLE IX- Miscellaneous 15
Section 9.1. Notices 15
Section 9.2. Expenses 16
Section 9.3. Governing Law; Consent to Jurisdiction 16
Section 9.4. Assignment; Successors and Assigns; No Third Party Rights 17
Section 9.5. Counterparts 17
Section 9.6. Titles and Headings 17
Section 9.7. Entire Agreement 17
Section 9.8. Amendment and Modification 17
Section 9.9. Public Announcement 17
Section 9.10. Waiver 17
Section 9.11. Severability 18
Section 9.12. No Strict Construction 18
Section 9.13. Risk of Loss 18
</TABLE>
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated December 31, 1997, between
Mimatar Corporation, a New Jersey corporation with its principal office located
at 124 Gregory Avenue, Passaic, New Jersey (the "Purchaser") and Sureway
Logistics Corporation a New York Corporation with its principal offices located
at 380 Allwood Road, Clifton, New Jersey 07012 (the "Seller") and Consolidated
Delivery and Logistics, Inc. in respect of Sections 2.3.2, 2.5.2 and 7.2 (c).
W I T N E S S E T H:
WHEREAS, the Seller is engaged in the fulfillment and direct
mail business and operates out of a leased warehouse facility located at 380
Allwood Road, Clifton, New Jersey (the "Business "); and
WHEREAS, the Seller desires to sell and transfer to the
Purchaser, and the Purchaser desires to purchase and assume from the Seller,
certain assets and certain liabilities relating to the Business, all as more
specifically provided herein.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and intending to be legally bound, the Seller and the
Purchaser agree as follows:
ARTICLE I
Certain Definitions
Section 1.1. Certain Definitions. As used in this Agreement,
the following terms have the respective meanings set forth below.
"Agreement" means this Asset Purchase Agreement.
"Allwood Lease" means the current real estate lease covering
the premises located at 380 Allwood Road, Clifton, New Jersey.
"Assumed Liabilities" means only those liabilities and
obligations of the business which (i) arise after the Closing Date under the
real estate and equipment leases and executory contracts described in Schedule
1.1 (c) and Schedule 1.1 (e) attached hereto and (ii) those liabilities and
obligations arising from the ordinary course of business of the Business after
the Closing Date including but not limited to sales commissions.
"Business" has the meaning ascribed to such term in the second
recital to this Agreement.
"Business Day" means a day, other than a Saturday or Sunday,
on which commercial banks in New Jersey are open for the general transaction of
business.
"CD&L" shall mean Consolidated Delivery and Logistics, Inc., a
Delaware Corporation having its principal offices located at 380 Allwood Road,
Clifton, New Jersey.
"Closing" has the meaning ascribed to such term in Section 2.8.
"Closing Date" has the meaning ascribed to such term in
Section 2.8.
"Damages" has the meaning ascribed to such term in Section 7.2.
"Encumbrances" has the meaning ascribed to such term
in Section 3.11.
"Governmental Authority" means any national, federal, state,
provincial, county, municipal or local government, foreign or domestic, or the
government of any political subdivision of any of the foregoing, or any entity,
authority, agency, ministry or other similar body exercising executive,
legislative, judicial, regulatory or administrative authority or functions of or
pertaining to government, including any authority or other quasi-governmental
entity established to perform any of such functions.
"Indemnified Party" has the meaning ascribed to such term
in Section 7.2.
"Indemnifying Party" has the meaning ascribed to such term
in Section 7.2.
"License Agreement" has the meaning ascribed to such term
in Section 1.1(j)
"Monhegan Lease" means the real estate lease covering premises
located at 35 Monhegan Street, Clifton, New Jersey as more particularly
described in Section 3.7.1 of this Agreement.
"Payment Term" has the meaning ascribed to such term in
Section 2.3.
"Person" means an individual, partnership, corporation, joint
stock company, unincorporated organization or association, trust or joint
venture, or a governmental agency or political subdivision thereof.
"Promissory Note" has the meaning ascribed in Section 2.3.2
"Purchase Price" has the meaning ascribed to such term
in Section 2.2.
"Purchased Assets" means all of the right, title and interest
in and to the following tangible and intangible assets used in the conduct of
the Business:
(a) the list of customers annexed hereto on Schedule 1.1(a)
(the "Customer List") which, Seller warrants sets forth all customers with whom
the Seller (i) currently does business;
(b) all books, records, files and papers relating to the
customers on the Customer List;
(c) all prepaid and /or advance rentals, other advances
and other prepaid expenses as set forth on Schedule 1.1 (c); and
(d) all security deposits as set forth on Schedule 1.1 (d)
(e) manufacturing, warehouse, computer and other equipment
used in the Business which Seller has identified on Schedule 1.1(e), if any (or
assignment of any computer leases); and
(f) all rights existing after the Closing Date under a certain
contract between Sureway Logistics Corporation and Thomas Publishing Company a
copy of which has been given to Purchaser as well as any purchase orders with
customers for work to be performed after the Closing Date.
(g) Seller's telephone numbers used in the Business;
(h) all authorizations, consents, approvals, licenses, orders,
permits, exemptions of, filings or registrations with, any Governmental
Authority which are assignable and which are necessary to conduct the Business;
(i) a license agreement (the "License Agreement") in the form
attached hereto on Schedule 1.1(i) whereby the Seller grants to the Purchaser
the limited right and license to use the Seller's trade name and service mark
"Sureway Logistics" in promotional materials covering its operation of the
Business subsequent to the Closing Date. The Purchaser acknowledges and agrees
that all promotional materials of any nature containing the Seller's service
mark shall be submitted in writing to the Seller for its approval, which
approval shall not be unreasonably withheld, prior to any publication or
distribution of any such promotional materials. This license shall have a term
of three (3) year from the Closing Date at which time it shall automatically
terminate and no further use of the Seller's service mark shall be made by the
Purchaser.
"Retained Assets" means all assets of the Business other than
the Purchased Assets, including:
(1) all corporate books and records of Seller;
(2) the Seller's accounts and notes receivable and other
assets arising from the business on or prior to Closing Date.
"Retained Liabilities" means any and all liabilities or
obligations of the Seller of any kind or nature, relating to the Business or the
Purchased Assets, arising out of events or transactions or facts occurring on
or, prior to, the Closing Date.
"Survival Period" has the meaning ascribed to such term
in Section 7.1.
"Third Party Claim" has the meaning ascribed to such term
in Section 7.3.
Section 1.2. Interpretation. Unless otherwise indicated to the
contrary herein by the context or use thereof: (i) the words, "herein,"
"hereto," "hereof" and words of similar import refer to this Agreement as a
whole and not to any particular Section or paragraph hereof; (ii) words
importing the masculine gender shall also include the feminine and neutral
genders, and vice versa; and (iii) words importing the singular shall also
include the plural, and vice versa.
ARTICLE II
Purchase and Sale of Assets; Assumption of Liabilities
Section 2.1. Purchase and Sale of Assets and Assumption of
Equipment Leases. Upon the terms and subject to the conditions of this Agreement
at the Closing (as defined in Section 2.8), the Seller shall sell, assign,
transfer, convey and deliver to the Purchaser all of the Seller's right, title
and interest in and to the Purchased Assets and the Purchaser shall purchase
such Purchased Assets from the Seller and assume the Assumed Liabilities
described herein.
Section 2.2. Purchase Price. (a) The total purchase price
(the "Purchase Price") to be paid by the Purchaser for the Purchased Assets
shall be the sum of EIGHT HUNDRED FIFTY THOUSAND DOLLARS (US $850,000.00)
Section 2.3.1 Payment of Purchase Price.
The Purchase Price shall be payable as follows:
(i) ONE HUNDRED TWENTY FIVE THOUSAND DOLLARS
(US $125,000.00) shall be paid in cash or its equivalent or by wire transfer on
the date of Closing.
(ii) The balance of the Purchase Price shall be
payable monthly in advance over the six (6) year period immediately following
the Closing Date (the "Payment Term") in the following manner:
(a) During the first year of the Payment Term
the Purchaser shall pay interest only against the remaining balance of the
Purchase Price at the rate of 6% per annum payable monthly in advance.
(b) During years two (2) through six (6) of the
Payment Term the then remaining balance of the Purchase Price shall be paid in
equal installments of principal and interest calculated at the rate of 6% per
annum payable monthly in advance.
Section 2.3.2 Promissory Note. To evidence such indebtedness
and the terms for repayment, at the Closing, the Purchaser shall deliver a
promissory note payable to Logistics in the form set forth in Schedule 2.3
attached hereto.
Section 2.3.3 Grant of a Security Interest. The Purchaser
hereby grants to the Seller a subordinate security interest in and to any and
all accounts receivable or other assets of the Purchaser arising after the
Closing Date from the Business subject only to any first priority security
interest granted by Purchaser on such assets to its primary lender.
Section 2.4. Security Agreement. Payment of the full remaining
balance of the Purchase Price due after the Closing Date shall be secured by a
Security Agreement (and UCC-1's) in the form attached hereto as Schedule 2.4.
Section 2.5.1 Assumption of Allwood Road. Purchaser agrees to
assume the Allwood Lease as of the Closing Date pursuant to a written assignment
and assumption as set forth in Schedule 2.5.1. Purchaser shall assist Seller to
obtain all necessary consents from the landlord for such assumption. Seller
shall remain responsible on such lease in accordance with the Allwood Lease.
Section 2.5.2 Sublease of Portion of Allwood Lease. Purchaser
agrees that it shall sublease to CD&L the office space CD&L currently occupies
at 380 Allwood Road, Clifton, New Jersey for a four (4) year term commencing as
of the Closing Date pursuant to a sublease Agreement in the form attached hereto
as Schedule 2.5.2. The annual rent to be paid by CD&L under the sublease
agreement shall be a fixed sum equal to $ 95,800 per annum payable monthly in
advance. No security shall be required by the Purchaser from CD&L for the
sublease. Seller shall use reasonable efforts to obtain consent from the
landlord on the Allwood Lease for the proposed sublease to CD&L.
Section 2.5.3. Surrender of Monhegan Lease. Purchaser agrees
that it shall accept a surrender in the form attached as Schedule 2.5.3 of the
below described Monhegan Lease as of the Closing Date and that said lease and
all future obligations after the Closing Date shall be terminated without
further obligation from the Seller or its affiliates. The Seller shall only be
responsible for the obligations under the Monhegan Lease prior to the Closing
Date.
Section 2.6. Secured Creditor. Seller represents and warrants
to the Purchaser that First Union Commercial Corporation is the only secured
creditor of Seller, and its lien on the Purchased Assets shall be released at or
prior to Closing subject to and in accordance with the Consent Letter attached
hereto as Schedule 2.6.
Section 2.7. Allocation of the Purchase Price. The Purchase
Price shall be allocated as set forth in Exhibit A hereto. The Purchaser and the
Seller shall use such allocation in filing their respective Internal Revenue
Service Form 8594s.
Section 2.8. Closing. The closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices of Seller on
December 31, 1997. The closing date shall be referred to as the "Closing Date".
Section 2.9. Failure to Obtain Consent. In the event (i)
the Landlord's formal consent as required above is not obtained by close of
business January 6, 1998 and (ii) the Seller advises Purchaser that Seller shall
not litigate the unreasonableness of the Landlord's refusal, the Parties agree
that this Agreement and the underlying transaction may be terminated by
Purchaser without liability or obligation between the parties except to return
any monies or assets previously transferred hereunder. If the Seller advises
Purchaser that Seller has decided to litigate against the Landlord this
Agreement shall continue provided the Parties agree on the terms of such
continuation.
ARTICLE III
Representations and Warranties of the Seller
The Seller represents and warrants to the Purchaser as follows:
Section 3.1. Financial Representation as to Value of Purchased
Assets. The assets set forth on Schedules 1.1 (c), (d) and (e) of this Agreement
compiled by the Seller presents fairly and completely the assets and values
described thereon as of November 30, 1997.
Section 3.2. The Purchased Assets. No third party (other than
First Union Commercial Corporation and/or any lessor or licenser of leased or
licensed equipment or software)) owns or has any interest by lease, license or
otherwise in any of the Purchased Assets owned by Seller. The documents of
transfer to be executed and delivered by the Seller at the Closing will be
sufficient to convey good and marketable title to the Purchased Assets to the
Purchaser, free and clear of all Encumbrances.
Section 3.3. Personal Property. The Seller has good and
marketable title to (or valid leasehold or contractual interests in) all
personal property comprising the Purchased Assets, free and clear of any
Encumbrances except as set forth on Schedule 3.11. All machinery, equipment,
furniture, fixtures and other personal property used in the Business and
included in the Purchased Assets has been inspected by Purchaser and is accepted
by Purchaser in an "as is" condition. All equipment leases shall, if assignable,
be assigned to Purchaser.
Section 3.4. Real Property. The Seller does not own any real
property or real estate.
Section 3.4.1 Lease Descriptions. The Seller leases the
following locations:
<TABLE>
<S> <C> <C> <C>
Current Monthly Lease
Location Basic Rent Landlord Expiration Date
380 Allwood Road Ninth Avenue
Clifton, New Jersey $39,000 Equities Co., Inc. June 30, 2002
Monhegan Place 350 Butler Street
Clifton, New Jersey $15,108 plus $3675 Corp. October 31, 1998
</TABLE>
Seller has delivered true and complete copies of its leases on
the foregoing premises to the Purchaser. Neither Seller nor any landlord is in
default on any such leases.
Seller has paid all rents and costs due to the various
landlords through the date hereof and shall continue to do so and to comply with
all other terms and conditions of each lease through the Closing Date.
Section 3.5. Employment Matters; No Collective Bargaining
Agreement.
(a) Schedule 3.5 sets forth a true and complete listing of all
employees, their positions and their salaries. Seller has no employee benefit
plans of any kind or nature (including but not limited to plans under ERISA)
except for a contributory employee health insurance plan. The Seller shall have
no future obligation to any employee of the Seller hired by the Purchaser. There
are no employment or compensation agreements with any employees of the Seller.
(b) No employees of the Seller have been, or are currently
represented by, any labor union or covered by any collective bargaining
agreement nor, to the best of the Seller's knowledge, is any organization
campaign to establish such representation in progress.
Section 3.6. Material Customers, Contracts and Commitments.
(a) The representations and warranties with respect to the
Customer List set forth in the definition of Purchased Assets is accurate and
complete.
(b) True and complete copies of all written contracts with
customers, including any amendments thereto, have been delivered by the Seller
to the Purchaser and such documents constitute the legal, valid and binding
obligation of the Seller and, to the Seller's knowledge, each other party
purportedly obligated thereunder.
(c) The Seller is not in, nor has it been given or received
notice of, any default or claimed, purported or alleged default, or facts that,
with notice or lapse of time, or both, would constitute a default (or give rise
to a termination right) on the part of any party in the performance of any
obligation to be performed under any of its contracts with its customers.
Section 3.7. Litigation. There are no lawsuits, actions,
proceedings, claims, orders or investigations by or before any Governmental
Authority pending or, to the Principals' knowledge after due investigation,
threatened against the Seller, or against the Principals and relating to the
Business or the Purchased Assets, or seeking to enjoin the transactions
contemplated hereby or which could have a material adverse effect on such
transactions or on Purchaser.
Section 3.8. Brokers. No Person is or will be entitled to a
broker's, finder's, investment banker's, financial adviser's or similar fee from
the Seller in connection with this Agreement or any of the transactions
contemplated hereby. The Seller has not employed any broker or agent in
connection with the transactions contemplated by this Agreement.
Section 3.9. Organization and Qualification of the Seller. The
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of New York, with full power and authority,
corporate and other, to own or lease its property and assets and to carry on the
Business as presently conducted.
Section 3.10. Authorization. The Seller has full power and
authority, corporate and other, to execute and deliver this Agreement, the
instruments of transfer and other documents referred to herein and to perform
its obligations hereunder and thereunder, all of which have been duly authorized
by all requisite corporate action. Each of this Agreement and each such
instrument of transfer has been or, at the time of delivery will be, duly
authorized, executed and delivered by the Seller and constitutes or, at the time
of delivery will constitute, a valid and binding agreement of the Seller
enforceable against the Seller in accordance with its terms.
Section 3.11. Non-contravention. Neither the execution and
delivery of this Agreement or the instruments of transfer nor the performance by
the Seller of its respective obligations hereunder and thereunder will (i)
contravene any provision contained in the Seller's Certificate of Incorporation
or By-laws, (ii) violate or result in a breach (with or without the lapse of
time, the giving of notice or both) of or constitute a default under (A) any
contract, agreement, commitment, indenture, mortgage, lease, pledge, note,
license, permit or other instrument or obligation or (B) any judgment, order,
decree, law, rule or regulation or other restriction of any Governmental
Authority, in each case to which the Seller is a party or by which it is bound
or to which any of its assets or properties are subject, (iii) result in the
creation or imposition of any lien, claim, charge, mortgage, pledge, security
interest, equity, restriction or other encumbrance (collectively,
"Encumbrances") on any of the Seller's assets or properties.
Section 3.12. No Consents. No notice to, filing with, or
authorization, registration, consent or approval of any Governmental Authority
or other Person is necessary for the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby by the
Seller.
Section 3.13. Insurance. At all times prior to the execution
of this Agreement, the Seller has maintained appropriate and adequate insurance
policies covering the Purchased Assets and all aspects of the Business.
Section 3.14. Transition Assistance. For a period of 30 days
after the Closing Date Seller shall make available to the Purchaser the services
of Robin Leach for limited assistance as determined by CD&L in the transition
accounting areas for the Business. In addition for a period of 90 days after
Closing the Seller shall make available to the Purchaser the services of Norton
Hight for limited assistance as reasonably determined by CD&L in the transition
sales and marketing areas for the Business.
ARTICLE IV
Representations and Warranties of the Purchaser
The Purchaser represents and warrants to the Seller and the
Principals as follows:
Section 4.1. Organization. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey and has full power and authority, corporate and other, to own its
properties and assets and to carry on its business as presently conducted except
where the failure to be so qualified would not have a material adverse effect on
its business.
Section 4.2. Authorization. The Purchaser has full power and
authority, corporate and other, to execute and deliver this Agreement and to
perform its obligations hereunder, all of which have been duly authorized by all
requisite corporate action. This Agreement, has been or, at the time of delivery
will be, duly authorized, executed and delivered by the Purchaser and constitute
or, at the time of delivery will constitute, a valid and binding agreement of
the Purchaser, enforceable against the Purchaser in accordance with its terms.
Section 4.3. Non-contravention. The Purchaser is not subject
to any provision of its Certificate of Incorporation or By-laws or any
agreement, instrument, law, rule, regulation, order, decree or judgment of any
Governmental Authority or other restriction that would prevent the consummation
of the transactions contemplated by this Agreement.
Section 4.4. No Consents. No notice to, filing with, or
authorization, registration, consent or approval of any Governmental Authority
or other Person is necessary for the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby by the
Purchaser.
Section 4.5. Brokers. No person is or will be entitled to a
broker's, finder's, investment banker's, financial adviser's or similar fee from
the Purchaser or CDL in connection with this Agreement or any of the
transactions contemplated hereby. The Purchaser has not employed any broker or
agent in connection with the transactions contemplated by this Agreement.
Section 4.6 Personal Property. The Purchaser hereby agrees to
assume all liabilities and obligations under any equipment leases or software
license agreements included as part of the Purchased Assets always provided such
liabilities and obligations arise after the Closing Date. Purchaser agrees it
shall enter into new leases/license agreements with existing lessors/licensors
where leases/licenses cannot be assigned.
Section 4.7 Collection Assistance. The Purchaser agrees to use
its best efforts to provide the Seller with all reasonable assistance required
to assist Seller in collecting accounts receivables arising from services
performed on or prior to the Closing Date including but not limited to
preparation and mailing of invoices and tracking payments when received.
ARTICLE V
Covenants and Agreements
Section 5.1 Pre-Closing Liabilities and Receivables. Seller
shall be solely responsible for any and all Retained Liabilities and shall
receive the benefits of any accounts receivable of the Business arising on or
prior to Closing Date. Purchaser shall have no liability to Seller for any such
liabilities or receivables or failure or inability to collect any such accounts
receivable.
Section 5.2. Post Closing Liabilities and of Accounts
Receivable. Purchaser shall be solely responsible for any and all liabilities
and accounts of the Business arising after the Closing Date.. Seller shall have
no liability to Purchaser for any such liabilities or failure or inability to
collect any such accounts receivable.
Section 5.3. Employment Matters. The Seller shall indemnify,
defend and hold harmless the Purchaser for any liabilities due to or incurred in
favor of its employees from events occurring prior to closing except for
obligations arising from services performed after the Closing Date to employees
actually hired by the Purchaser.
Section 5.4. Transfer and Property Taxes. (a) The Seller shall
pay any transfer, sales, purchase, use or similar tax under the laws of any
Governmental Authority arising out of or resulting from the purchase of the
Purchased Assets. The Seller shall prepare and file the required tax returns and
other required documents with respect to the taxes and fees required to be paid
by the Seller pursuant to the preceding sentence.
(b) The Seller shall (i) prepare and file all tax returns
reporting the income attributable to the Purchased Assets or the operation of
the Business for all periods ending prior to or on the Closing Date, (ii)
prepare and file all income tax returns reporting the income of the Seller
arising on the Closing Date from the sale to the Purchaser of the Purchased
Assets, (iii) be responsible for the conduct of all tax examinations relating to
the tax returns referred to in (i) and (ii) above, and (iv) pay all taxes
attributable to the sale of Purchased Assets or the operation of the Business
due with respect to the tax returns referred to in (i) and (ii) above. The
Purchaser shall prepare and file all tax returns reporting the income
attributable to the ownership of the Purchased Assets and the operation of the
Business for all periods beginning after the Closing Date and shall be liable
for and pay all taxes due in respect of such tax returns.
Section 5.5. Closing Documents. The Seller shall, prior to or
on the Closing Date, execute and deliver, or cause to be executed and delivered
to the Purchaser, the documents or instruments described in Section 6.2. The
Purchaser shall, prior to or on the Closing Date, execute and deliver, or cause
to be executed and delivered, to the Seller, the documents or instruments
described in Section 6.3.
Section 5.6 Real Estate Tax Appeal. The Purchaser shall
receive the full amount of any reduction in real estate taxes being paid
resulting from any tax grievance filed by Purchaser or the landlord.
Section 5.7 Prior Sales Taxes. CD&L shall be responsible for
payment of any sales taxes from the operation of the Business on or prior to the
Closing Date if such sales taxes, if any, are not paid by the Seller.
ARTICLE VI
Conditions to Closing
Section 6.1. Mutual Condition. The respective obligations of
each party to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment at or prior to Closing of the condition that (A)
no Governmental Authority of competent jurisdiction shall have (i) enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
judgment, decree, injunction or other order which is in effect; or (ii)
commenced or threatened any action or proceeding, which in either case would
prohibit consummation of the transactions contemplated by this Agreement and (B)
no action or proceeding before a court or any other governmental agency or body
shall have been instituted or threatened to restrain or prohibit the
transactions, contemplated by this Agreement and (C) CD&L shall have signed the
guarantee attached as Schedule 6.1 and (D) Martin Roffman shall have signed and
delivered the Personal Guarantee attached as Schedule 6.1 (D).
Section 6.2. Conditions to the Purchaser's Obligations. The
obligations of the Purchaser to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment prior to or at Closing of each of
the following conditions:
(a) all representations and warranties made by the Seller in
this Agreement and the Schedules hereto shall be true, correct and complete on
the date hereof and as of the Closing Date as though such representations and
warranties were made as of the Closing Date, and the Seller shall have duly
performed or complied with all of the covenants, obligations and conditions to
be performed or complied with by them under the terms of this Agreement on or
prior to or at Closing;
(b) all authorizations, consents, waivers, approvals or other
actions required in connection with the execution, delivery and performance of
this Agreement by the Seller and the consummation the Seller of the transactions
contemplated hereby shall have been obtained and shall be in full force and
effect and (ii) the Seller shall have obtained any authorizations, consents,
waivers, approvals or other actions required to prevent a material breach or
default by the Seller under any agreement to which the Seller is a party and
which relates and is material to the Purchased Assets or the Business and is
being assumed by the Purchaser;
(c) prior to or at Closing, the Seller shall have signed
and/or delivered to the Purchaser all instruments of transfer and conveyance
identified herein and such other closing documents as shall be reasonably
requested by the Purchaser, including the following:
(i) such instruments of sale, transfer, assignment
conveyance and delivery (including a Bill of Sale as set forth on
Schedule 6.2 (c) (i) of the Agreement as are required in order to
transfer to the Purchaser good and marketable title to the Purchased
Assets, free and clear of all Encumbrances except as provided herein;
(ii) consent of First Union Commercial Corporation,
if required, and UCC-3's or other appropriate evidence of release of
any Encumbrances;
(iii) landlord's consent as set forth on Schedule
6.2 (c) of this Agreement with respect to assignment of the Allwood
Lease;
(iv) the License Agreement;
(v) such other documents or instruments as the
Purchaser reasonably requests to effect the transactions contemplated
hereby.
(d) all actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall have been approved by counsel to the Purchaser.
Section 6.2.1. Purchaser's Financial Acknowledgment. Prior to
the Closing Date, the Purchaser acknowledges and agrees it has had sufficient
time to review and has reviewed the most recent, unaudited, financial statements
of Seller and such financial statements are acceptable and satisfactory for the
purpose of evaluating the transaction covered by this Agreement.
Section 6.3. Conditions to the Seller's Obligations. The
obligations of the Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing of each
of the following conditions:
(a) All representations and warranties made by the Purchaser
in this Agreement shall be true and correct in all material respects on the date
hereof and as of the Closing Date as though such representations and warranties
were made as of the Closing Date, and the Purchaser shall have duly performed or
complied in all material respects with all of the covenants, obligations and
conditions to be performed or complied with by it under the terms of this
Agreement on or prior to or at Closing.
(b) All authorizations or approvals required in connection
with the execution, delivery and performance of this Agreement, by the Purchaser
and any third party consents required hereunder and the consummation by the
Purchaser of the transactions contemplated hereby shall have been obtained and
shall be in full force and effect.
(c) Prior to or at Closing, the Purchaser shall have delivered
to the Seller such closing documents as shall be reasonably requested by the
Seller in form and substance reasonably acceptable to the Seller's counsel,
including but not limited to the following:
(i) check payable to the Seller in the sum of
ONE HUNDRED TWENTY FIVE THOUSAND DOLLARS (us $125,000)
(ii) Promissory Note to the Seller in the sum of
SEVEN HUNDRED TWENTY FIVE THOUSAND DOLLARS ($725,000)
(iii) surrender of the Monhegan Lease
(iv) a signed agreement whereby Purchaser assumes all
obligations of Seller under the Allwood Lease as required under Section
2.5.1; and
(vi) a signed sublease to CDL as required under
Section 2.5.2 of this Agreement.
(vii) a signed security Agreement and UCC-1's as
required under Section 2.4.
(d) All actions, proceedings, instruments and
documents required to carry out this Agreement or incidental hereto and all
other related legal matters shall have been approved by counsel to the Seller.
ARTICLE VII
Indemnification
Section 7.1. Survival of Representations and Warranties. The
representations and warranties provided for in this Agreement shall survive the
Closing for the benefit of the parties hereto and their successors and assigns.
Section 7.2. Indemnification. (a) The Seller shall indemnify,
defend and hold harmless the Purchaser, against and in respect of any and all
claims, costs, expenses, damages, liabilities, losses or deficiencies
(including, without limitation, counsel's fees and other costs and expenses
incident to any suit, action or proceeding) (the "Damages") arising out of,
resulting from or incurred in connection with (i) any inaccuracy in any
representation or the breach of any warranty made by the Seller in this
Agreement and (ii) the breach of any covenant or agreement by the Seller under
this Agreement.
(b) The Purchaser shall indemnify and hold harmless the Seller
and any Person claiming by or through any of them, against and in respect of any
and all damages arising out of, resulting from or incurred in connection with
(i) the breach by the Purchaser of any covenant or agreement to be
performed by them hereunder and (ii) any inaccuracy in any representation or the
breach of any warranty made by the Purchaser in this Agreement for the
applicable Survival Period.
(c) CD&L shall indemnify and hold harmless the Purchaser from
any and all damages incurred by the Purchaser from third parties always provided
such damages arose out of properly due and owing liabilities of the Seller on or
prior to the Closing Date.
(d) Any Person providing indemnification pursuant to the
provisions of this Section 7.2 is hereinafter referred to as an "Indemnifying
Party" and any Person entitled to be indemnified pursuant to the provisions of
this Section 7.2 is hereinafter referred to as an "Indemnified Party."
Section 7.3. Procedures for Third Party Claims. In the case of
any claim for indemnification arising from a claim of a third party (a "Third
Party Claim"), an Indemnified Party shall give prompt written notice to the
Indemnifying Party of any claim or demand which such Indemnified Party has
knowledge and as to which it may request indemnification hereunder. The
Indemnifying Party shall have the right to defend and to direct the defense
against any such Third Party Claim, in its name or in the name of the
Indemnified Party, as the case may be, at the expense of the Indemnifying Party,
and with counsel selected by the Indemnifying Party unless (i) such Third Party
Claim seeks an order, injunction or other equitable relief against the
Indemnified Party, or (ii) the Indemnified Party shall have reasonably concluded
that (x) there is a conflict of interest between the Indemnified Party and the
Indemnifying Party in the conduct of the defense of such Third Party Claim or
(y) the Indemnified Party has one or more defenses not available to the
Indemnifying Party. Notwithstanding anything in this Agreement to the contrary,
the Indemnified Party shall, at the expense of the Indemnifying Party, cooperate
with the Indemnifying Party, and keep the Indemnifying Party fully informed, in
the defense of such Third Party Claim. The Indemnified Party shall have the
right to participate in the defense of any Third Party Claim with counsel
employed at its own expense; provided, however, that, in the case of any Third
Party Claim or demand described in clause (i) or (ii) of the second preceding
sentence or as to which the Indemnifying Party shall not in fact have employed
counsel to assume the defense of such Third Party Claim, the reasonable fees and
disbursements of such counsel shall be at the expense of the Indemnifying Party.
The Indemnifying Party shall have no indemnification obligations with respect to
any such Third Party Claim or demand which shall be settled by the Indemnified
Party without the prior written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed.
Section 7.4. Procedures for Inter-Party Claims. In the event
that an Indemnified Party determines that it has a claim for Damages against an
Indemnifying Party hereunder (other than as a result of a Third Party Claim),
the Indemnified Party shall give prompt written notice thereof to the
Indemnifying Party, specifying the amount of such claim and any relevant facts
and circumstances relating thereto. The Indemnified Party shall provide the
Indemnifying Party with reasonable access to its books and records for the
purpose of allowing the Indemnifying Party a reasonable opportunity to verify
any such claim for Damages. The Indemnified Party and the Indemnifying Party
shall negotiate in good faith regarding the resolution of any disputed claims
for Damages. Promptly following the final determination of the amount of any
Damages claimed by the Indemnified Party, the Indemnifying Party shall pay such
Damages to the Indemnified Party by wire transfer or check made payable to the
order of the Indemnified Party, without interest. In the event that the
Indemnified Party is required to institute legal proceedings in order to recover
Damages hereunder, the cost of such proceedings (including costs of
investigation and reasonable attorneys' fees and disbursements) shall be added
to the amount of Damages payable to the Indemnified Party.
Section 7.5 Post Closing Corporation. Each party agrees that
it shall take such action and sign such documents that may be required following
Closing to effectuate the terms of this Agreement.
ARTICLE VIII
Default
Section 8.1. Default by the Purchaser. In the event the
Purchaser breaches a material term hereof fails to make any payment which it is
obligated to make pursuant to Section 2.3 of this Agreement and such failure or
breach shall continue for a period of thirty (30) days after written notice
thereof or has been given to the Purchaser then in addition to any other right
or remedy available to Seller either at law in equity or under this Agreement
Purchaser agrees that any and all payments remaining due over the unexpired term
of the Payment Term shall be deemed immediately due and payable in their
entirety without further notice to Purchaser.
ARTICLE IX
Miscellaneous
Section 9.1. Notices. All notices or other communications
required or permitted hereunder shall be in writing and shall be delivered
personally, by facsimile or sent by certified, registered or express air mail,
postage prepaid, and shall be deemed given when so delivered personally, or by
facsimile, or if mailed, five days after the date of mailing, as follows:
If to the Seller: 380 Allwood Road
Clifton, New Jersey 07012
Telephone: (973) 471-1005
Facsimile: (973) 471-5519
Attention: General Counsel
With a copy to: Lowenstein, Sandler, Kohl,
Fisher & Boylan
65 Livingston Avenue
Roseland, New Jersey 07068
Telephone: (201) 992-8700
Facsimile: (201) 992-5820
Attention: Alan Wovsaniker, Esq.
If to the Purchaser:
Telephone: (973) 779-6654
Facsimile: (973) 779-3071
Attention: Anthony Pappa
With a copy to: Arnold Shurkin, Esq.
124 Gregory Avenue
Passaic, New Jersey 07055
Telephone: (973) 779-4647
Facsimile: (973) 779-4927
Section 9.2. Expenses. Regardless of whether the transactions
provided for in this Agreement are consummated, except as otherwise provided
herein, each party hereto shall pay its own expenses incident to this Agreement
and the transactions contemplated herein, including all professional fees.
Section 9.3. Governing Law; Consent to Jurisdiction This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New Jersey, without reference to the choice of law
principles thereof. Each of the parties hereto irrevocably submits to the
non-exclusive jurisdiction of the courts of the State of New Jersey and the
United States District Court for the District of New Jersey for the purpose of
any suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served on each party
hereto anywhere in the world by the same methods as are specified for the giving
of notices under this Agreement. Each of the parties hereto irrevocably consents
to the jurisdiction of any such court in any such suit, action or proceeding and
to the laying of venue in such court. Each party hereto irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
Section 9.4. Assignment; Successors and Assigns; No Third
Party Rights. This Agreement may not be assigned by operation of law or
otherwise, and any attempted assignment shall be null and void. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns and legal representatives. This Agreement shall
be for the sole benefit of the parties to this Agreement and their respective
successors, assigns and legal representatives and is not intended, nor shall be
construed, to give any Person, other than the parties hereto and their
respective successors, assigns and legal representatives, any legal or equitable
right, remedy or claim hereunder.
Section 9.5. Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original agreement, but all of
which together shall constitute one and the same instrument.
Section 9.6. Titles and Headings. The headings and table of
contents in this Agreement are for reference purposes only, and shall not in any
way affect the meaning or interpretation of this Agreement.
Section 9.7. Entire Agreement. This Agreement, including the
Schedules and Exhibits attached thereto, constitutes the entire agreement among
the parties with respect to the matters covered hereby and supersedes all
previous written, oral or implied understandings among them with respect to such
matters.
Section 9.8. Amendment and Modification. This Agreement may
only be amended or modified in writing signed by the party against whom
enforcement of such amendment or modification is sought.
Section 9.9. Public Announcement. Except as previously
announced by CD&L or as may be required by law, neither the Seller, on the one
hand, nor the Purchaser, on the other hand, shall issue any press release or
otherwise publicly disclose this Agreement or the transactions contemplated
hereby or any dealings between or among the parties in connection with the
subject matter hereof without the prior approval of the other which approval
shall not be unreasonably withheld or delayed. In the event that any such press
release or other public disclosure shall be required, the party required to
issue such release or other disclosure shall consult in good faith with the
other party hereto with respect to the form and substance of such release or
other disclosure prior to the public dissemination thereof.
Section 9.10. Waiver. Any of the terms or conditions of this
Agreement may be waived at any time by the party or parties entitled to the
benefit thereof, but only by a writing signed by the party or parties waiving
such terms or conditions.
Section 9.11. Severability. The invalidity of any portion
hereof shall not affect the validity, force or effect of the remaining portions
hereof. If it is ever held that any restriction hereunder is too broad to permit
enforcement of such restriction to its fullest extent, such restriction shall be
enforced to the maximum extent permitted by law.
Section 9.12. No Strict Construction. Each of the Purchaser,
the Seller and the Principals acknowledge that this Agreement has been prepared
jointly by the parties hereto, and shall not be strictly construed against any
party.
Section 9.13. Risk of Loss. Prior to the Closing, the risk of
loss with respect to the Purchased Assets shall remain with the Seller. In the
event of any material casualty prior to closing, the Purchaser shall have the
right to terminate this Agreement upon giving written notice of its election to
terminate to the Seller.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
Mimatar Corporation
By:___________________________
Name: Anthony A. Pappa
Title: President
Date: December 31, 1997
Sureway Logistics Corporation
By:____________________________
Name:__________________________
Title:___________________________
Date:___________________________
Consolidated Delivery and Logistics, Inc.
By:_________________________________
Name: Albert W. Van Ness, Jr.
Title: Chairman & Chief Executive Officer
Date: December 31, 1997
<PAGE>
Exhibits
Exhibit A Allocation of Purchase Price
<PAGE>
EXHIBIT A
Allocation of Purchase Price
Deposits $ 132,620.71
Prepared Expense $ 160,172.00
FF&E $ 557,207.29
<PAGE>
Schedules
Schedule 1.1 (a) Customer List
Schedule 1.1 (c) Prepaid Expenses
Schedule 1.1 (d) Security Deposits
Schedule 1.1 (e) Schedule of Manufacturing, Warehouse, Computer and
other Equipment
Schedule 1.1 (i) License Agreement
Schedule 2.3.2 Promissory Note
Schedule 2.4 Security Agreement
Schedule 2.5.1 Assignment and Assumption of Allwood Lease
Schedule 2.5.2 Sublease Agreement
Schedule 2.5.3 Surrender of Monhegan Lease
Schedule 2.6 Bank Consent Letter and Estoppal Certificate
Schedule 3.5 List of Employees
Schedule 3.11 List of Permitted Encumbrances
Schedule 6.1 (C) CD&L Guarantee
Schedule 6.1 (D) Roffman Guaranty
Schedule 6.2 (c) (i) Bill of Sale
Schedule 6.2 (c) (vi) Landlord's Consent
<PAGE>
Schedule 2.3.2
PROMISSORY NOTE
US $725,000.00 December 31, 1997
FOR VALUE RECEIVED Mimatar Corporation, a New Jersey
corporation, ("Maker"), hereby promises to pay to the order of Sureway Logistics
Corporation, a New York corporation ("Payee"), the principal sum of SEVEN
HUNDRED TWENTY FIVE THOUSAND DOLLARS (US $725,000) together with interest on the
unpaid balance at the rate of six percent (6%) per annum.
Payments of principal and interest hereunder shall be due
and payable as follows:
(a) Commencing February 1, 1998 and continuing on the first
day of each month up to and including January 1, 1999, monthly payments of
interest only of THREE THOUSAND SIX HUNDRED TWENTY FIVE DOLLARS ($3,625.00).
(b) Commencing on February 1, 1999 and continuing on the
first day of each month up to and including January 1, 2004, monthly payments of
principal and/or interest of FOURTEEN THOUSAND SIXTEEN DOLLARS AND TWENTY EIGHT
CENTS ($14,016.28) so as to retire the outstanding principal balance of the Note
based on a five (5) year amortization schedule a copy of which is annexed
hereto.
All payments shall be made in lawful United States currency
to payee on or before the date due at Consolidated Delivery & Logistics, Inc.,
380 Allwood Road, Clifton, New Jersey 07012, Attention: Controller, or to such
other address or person as Payee may designate in writing to Maker. If all or
any portion of any payment is not made on or before the tenth (10th) calendar
day following the date such payment is due, such unpaid amount shall accrue
interest from and after the date such payment is due until and including the
date such payment is made at the lesser of (a) the rate of interest established
herein plus five percent (5%), or (b) the maximum rate that can be lawfully
charged under applicable statutes and regulations. Maker agrees and acknowledges
that such late charge is a reasonable estimate of the damages and loss to Payee
as a result of such late payment and agrees to pay such sum on demand. All
payments shall first be applied to the payment of all charges under this Note
other than principal and interest owed to Payee, then to accrued and unpaid
interest, and the balance, if any, towards reduction of the principal.
This Note is and shall remain secured by (i) Security
Agreement (the "Security Agreement") by and between Maker and Payee of each of
even date herewith, the terms and conditions of which are incorporated herein by
reference in their entirety.
For purposes of this Note, an "Event of Default" shall
include any of the following:
(a) the failure by Maker to make any payment due hereunder
in full on or before the twentieth (20th) calendar day following the date that
such installment is due and payable;
(b) the failure by Maker to perform any of its obligations
under this Note:
(c) any material breach or any event of default under the
Security Agreement; and
(d) the appointment of a custodian, receiver, or liquidator
for Maker or any of its/his property, the adjudication of Maker as insolvent,
the making by Maker or of an assignment for the benefit of creditors, an
admission by Maker in writing of its/his inability to pay its/his as they become
due, or the commencement of any proceeding under any bankruptcy law by or
against Maker:
Upon the occurrence of any Event of Default, the entire
principal sum outstanding, together with all accrued and unpaid interest, shall
immediately become due and payable without notice, at the option of Payee and
Payee shall be entitled to immediately offset such entire principal sum and all
accrued interest from any amounts then due and owing from Payee to Maker,
provided, however, that if such Event of Default consists of other than a
failure by Maker to make a timely payment of principal and interest, Payee will
give Maker ten (10) days following receipt of prior written notice of such Event
of Default before exercising any of Payee's rights and remedies, and provided
further that if said Event of Default cannot be cured within ten (10) days of
the date of receipt of the notice described herein, such failure shall not
constitute a continuing Event of Default so long as Maker begins curative action
within said ten (10) day period and diligently pursues such action to completion
within thirty (30) days of the date of the receipt of the notice. If an Event of
Default consists of a failure by Maker to make a timely payment of principal and
interest, Payee will give Maker five (5) days following receipt of prior written
notice before exercising its rights and remedies. Payee may exercise this option
to accelerate during any Event of Default by Maker regardless of any prior
forbearance, and acceptance by Payee of payments in arrears shall not waive or
affect any prior or subsequent acceleration of Payee. The remedies of Payee, as
provided herein, shall be cumulative and concurrent and may be pursued singly,
successively or together, at the sole discretion of Payee and, except as limited
herein, may be exercised as often as occasion therefor shall occur, and the
failure to exercise any such right of remedy shall in no event be construed as a
waiver or release thereof.
Maker agrees to pay to Payee all reasonable costs and
expenses of collection and/or suit, including but not limited to all reasonable
attorneys' fees regardless of whether litigation is commenced.
Maker may prepay the principal amount outstanding, together
with all accrued and unpaid interest, in whole or in part. Any partial
prepayments shall first be applied to the payment of all charges under this Note
other than principal and interest owed to Payee, then to all accrued interest
due on the date of such prepayment, and then to the principal amount
outstanding. Any partial prepayments shall not postpone the due date of any
subsequent monthly principal and interest payments or change the amount thereof,
unless Payee agrees in writing.
Payee may, without notice, grant extensions in the time of
payment of and reductions in the rate of interest on any monies owing under this
Note, before, at or after maturity, and any of the foregoing shall be binding
upon Maker.
Maker hereby waives demand, presentment, notice of dishonor,
diligence, protest, notice of protest, and all other demands and notices. In any
litigation to which Payee and Maker shall be adverse parties, Maker hereby
waives (to the extent permitted by law) the right to claim any defense based on
any statutes of limitations or on any claim of laches and waives any
counterclaim, cross-claim, or set-off of any nature or description. Maker also
(a) acknowledges and agrees that Payee can bring any suit, action, or proceeding
under this Note or any of the documents or instruments mentioned herein in the
courts of the State of New Jersey or the United States District Court for the
District of New Jersey, (b) consents to the jurisdiction of such courts, and (c)
consents to and waives any objection which Maker now has or may hereafter have
to proper venue existing in any of such courts.
Any notice to Maker provided for in this Note shall be given
by mailing such notice by registered or certified mail, return receipt
requested, postage prepaid, addressed to Maker at 380 Allwood Road, Clifton, New
Jersey, or to such other address as Maker may designate in writing to Payee as
provided herein. Any notice to Payee shall be given by mailing such notice by
registered or certified mail, return receipt requested, postage prepaid,
addressed to Payee, at 380 Allwood Road, Clifton, New Jersey 07012, Attention:
General Counsel, or at such other address as Payee may designate by notice to
Maker. Notice shall be deemed given to maker or Payee three (3) days following
deposit in the United States mail in such manner.
This note is to be construed in accordance with the laws of
the State of New Jersey . In case any one or more of the provisions of this Note
shall, for any reason, be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provisions of this Note, and this Note shall be construed as if such
invalid, illegal, or unenforceable provision had never been contained herein. If
any one or more of the provisions contained in this Note shall for any reason be
held to be unenforceable as to amount, time, duration, scope, activity, or
subject, such provision shall be construed by limiting and reducing it so as to
make such provision enforceable to the extent compatible with applicable law.
This Note cannot be changed, amended, or modified orally.
This writing is intended by the parties as a final expression of this Note and
also is intended as a complete and exclusive statement of the terms of this
Note. No course of prior dealing between the parties, no usage of trade, and no
parol or extrinsic evidence of any nature shall be used to supplement or modify
any term hereof, nor any there any conditions to the full effectiveness of this
Note.
Time is of the essence with respect to all of Maker's
obligations and agreements under this Note.
This Note shall not be assignable by Maker without Payee's
prior written consent, which may be withheld in the sole judgment of the Payee.
By:_____________________________________________
Name:
Title:
ACKNOWLEDGMENT
STATE of )
) ss:
COUNTY of )
On December , 1997 before me, ,
of , to me known, and
known to me to hold said position with said corporation, and who executed the
foregoing Promissory Note on behalf of said corporation, and duly acknowledged
to me that he executed the same and was authorized to do so on behalf of said
corporation.
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NOTARY PUBLIC
