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
August 5, 1998
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.)
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ITEM 2. Acquisition or Disposition of Assets
On August 5, 1998, Consolidated Delivery & Logistics, Inc. ("CDL") entered into
and consummated an agreement (the "Stock Purchase Agreement") with its
subsidiary, Silver Star Express, Inc. ("Silver Star") and KBD Services, Inc.
("KBD") and David L. Chesney, KBD's sole shareholder, whereby Silver Star
purchased all of the outstanding shares of the capital stock of KBD.
The purchase price was approximately $4 million, with $2 million in cash, a
$1.46 million 7% subordinated convertible note (the "Note") and a $500,000 7%
contingent subordinated convertible note (the "Contingent Note"). The Note is
due August 5, 2003 with interest payable quarterly commencing October 1, 1998
and is convertible in its entirety at the option of the holder at any time
through July 1, 2003 into fully paid shares of CDL's stock at the conversion
price of $6 per share. CDL may convert all or any part of the Note into fully
paid shares of CDL's stock at a conversion price of $6 per share when the
average closing sales price equals or exceeds $6 over a thirty day period. The
Contingent Note is subject to a dollar for dollar reduction or discharge if
KBD's earnings before interest and taxes is less than $700,000 for the year
ending July 31, 1999 and is due with interest on the finally determined
principal amount on November 1, 1999. The holder or CDL may convert the
Contingent Note in its entirety into fully paid shares of CDL's stock at a
conversion price of $6 after September 16, 1999 through October 20, 1999. The
Note and the Contingent Note are subordinate to all indebtedness due or to
become due to CDL's senior lender, First Union Commercial Corporation or its
affiliates.
The description above of the Stock Purchase Agreement, Note and Contingent 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
a. Financial Statement of Business Acquired.
It is impracticable to provide the required financial statements for KBD at this
time. The statements will be filed as an amendment to this report on Form 8-K as
soon as they are prepared and not later than 60 days after the deadline for
filing this Form 8-K.
b. Pro Forma Financial Information
It is impracticable to provide the required pro forma financial statements for
KBD at this time. The statements will be filed as an amendment to this report on
Form 8-K as soon as they are prepared and not later than 60 days after the
deadline for filing this Form 8-K.
c. Exhibits
10.1 Stock Purchase Agreement dated August 5, 1998 by and between
Consolidated Delivery & Logistics, Inc., KBD Services, Inc.,
Silver Star Express, Inc. and David L. Chesney.
10.2 7% Subordinated Convertible Note Due 2003 of Consolidated
Delivery & Logistics, Inc.
10.3 7% Contingent Subordinated Convertible Note Due 1999 of
Consolidated Delivery & Logistics, Inc.
99.1 Press Release issued August 10, 1998 regarding acquisition of
KBD Services, Inc.
<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: August 18, 1998 CONSOLIDATED DELIVERY & LOGISTICS, INC.
(Registrant)
By: /s/ Albert W. Van Ness, Jr.
Albert W. Van Ness, Jr.
Chairman of the Board, Chief Executive
Officer and Chief Financial Officer
<PAGE>
Exhibit 10.1
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated August 5, 1998, by and among KBD Services,
Inc., a North Carolina corporation ("KBD" or the "Company"), David L. Chesney,
an individual with an address at 760 Reedy Creek Road, Cary, North Carolina
27512, (the "Shareholder"), Consolidated Delivery & Logistics, Inc., a Delaware
corporation ("CDL") and Silver Star Express, Inc., a Florida corporation and
wholly owned subsidiary of CDL ("Purchaser").
W I T N E S S E T H:
WHEREAS, the Shareholder is the record and beneficial holder of all of the
issued and outstanding capital stock of the Company; and
WHEREAS, the Shareholder desires to sell and transfer to Purchaser, and
Purchaser desires to purchase from the Shareholder, all of the outstanding
shares of capital stock of the Company, all as more specifically provided
herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
intending to be legally bound, the parties hereto 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.
"Accounts Receivable" has the meaning ascribed to such term in Section 3.19.
"Affected Property" has the meaning ascribed to such term in
Section 3.15.
"Affiliate" means, with respect to any Person, any other Person who
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlled" and "controlling" have meanings correlative thereto.
"Agreement" means this Stock Purchase Agreement.
"Authorizations" has the meaning ascribed to such term in Section 3.9.
"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.
"Closing" has the meaning ascribed to such term in Section 2.4.
"Closing Date" has the meaning ascribed to such term in Section 2.4.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Common Stock" has the meaning ascribed to such term in
Section 2.1.
"Contracts" has the meaning ascribed to such term in Section 3.20.
"Damages" has the meaning ascribed to such term in Section 9.2.
"Employee Benefit Plan" has the meaning ascribed to such term in
Section 3.17.
"Encumbrances" has the meaning ascribed to such term in Section 3.3.
"Environmental Laws" means any federal, state or local law, statute,
ordinance, rule, regulation, license, permit, authorization, approval, consent,
court order, judgment, decree, injunction, code, requirement or agreement with
any Governmental Authority, (x) relating to pollution (or the cleanup thereof or
the filing of information with respect thereto), human health or the protection
of air, surface water, ground water, drinking water supply, land (including land
surface or subsurface), plant and animal life or any other natural resource, or
(y) concerning exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production or
disposal of Regulated Substances, in each case as amended and as now or
hereafter in effect.
"Financial Statements" has the meaning ascribed to such term in
Section 3.8.
"Five Year Note" has the meaning ascribed to such term in Section 2.2.
"GAAP" means generally accepted accounting principles as in effect in
the United States on the date of this Agreement.
"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 9.2.
"Indemnifying Party" has the meaning ascribed to such term in
Section 9.2
"Leased Real Property" has the meaning ascribed to such term in
Section 3.7.
"Material Adverse Change" means a material adverse change in the
business, financial condition, or results of operations (financial and other) of
the entity.
"Material Adverse Effect" means a material adverse effect on the
business, financial condition or results of operations of the entity.
"Notes" has the meaning ascribed to such term in Section 2.2.
"One Year Note" has the meaning ascribed to such term in Section 2.2.
"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.
"Proprietary Rights" has the meaning ascribed to such term in Section
3.18.
"Purchase Price" has the meaning ascribed to such term in Section 2.2.
"Regulated Substances" means pollutants, contaminants, hazardous or
toxic substances, compounds or related materials or chemicals, hazardous
materials, hazardous waste, flammable explosives, radon, radioactive materials,
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum and petroleum products (including, but not limited to, waste petroleum
and petroleum products) as regulated under applicable Environmental Laws.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Survival Period" has the meaning ascribed to such term in Section 9.1.
"Tangible Net Worth" means Total Assets, less (without limitation and
without duplication of deductions) the sum of (A) Total Liabilities of a Person,
(B) any reserves established by a Person for anticipated losses or expenses, (C)
the amount, if any, of all intangible items including any leasehold rights, the
amount of any investment in any Affiliates or other entity including a
subsidiary, good will (including any amounts, however designated on the balance
sheet, representing the cost of acquisition of business and investments in
excess of underlying tangible assets), trademarks, trademark rights, trade name
rights, copyrights, patents, patent rights, licenses, unamortized debt discount,
marketing expenses and customer and/or mailing lists and (D) all amounts due
from employees, stockholders, Affiliates and subsidiaries.
"Third Party Claim" has the meaning ascribed to such term in
Section 9.3.
"Total Assets" means, at any date, the amount shown in the books and
records of a Person, determined in accordance with GAAP, of all property, both
real and personal, of a Person.
"Total Liabilities" means, at any date, the amount of all liabilities
which, in accordance with GAAP, should be included in determining total
liabilities as shown on a liability side of a balance sheet of a Person at such
date.
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. References to the "knowledge" of the
Stockholder or the Company means matters which the Shareholder knows or should
know in the performance of his duties for the Company.
ARTICLE II
Purchase and Sale of Stock;
Additional Covenants
Section 2.1 Purchase and Sale of Stock. Upon the terms and
subject to the conditions of this Agreement and on the basis of the
representations, warranties and agreements contained herein, at the Closing (as
defined in Section 2.4), the Shareholder shall sell, assign, transfer, convey
and deliver to Purchaser (i) an aggregate of 100 shares of the common stock, par
value $1.00 per share, of the Company (the "Company Common Stock"), which the
Shareholder represents constitutes all of the issued and outstanding shares of
the Company's capital stock, and Purchaser shall purchase such shares from the
Shareholder.
Section 2.2. Purchase Price.
(a) The aggregate purchase price (the "Purchase Price")
to be paid by Purchaser for the Company Common Stock shall be an amount equal to
$4,028,777 subject to reduction as provided below and in the One Year Note (the
"Purchase Price").
(b) The Base Purchase Price shall be payable in four parts
as follows:
(i) $2,033,777, shall be payable in cash at the
Closing (the "Cash Portion") by wire transfer to an account or accounts of the
Shareholder specified in writing by the Shareholder or by one or more certified
or bank cashier's checks payable to the order of the Shareholder;
(ii) $35,000 shall be payable in cash by wire
transfer or check within ten (10) business days after the Shareholder provides
the Purchaser with proof that all liabilities of the Company for interest and
penalties due to any taxing authority arising from or relating to periods ending
on or prior to the Closing Date have been satisfied in full;
(iii) $1,460,000, shall be paid by delivery of a
convertible note of CDL with a five (5) year term payable to the Shareholder
substantially in the form of Exhibit A hereto (the "Five Year Note"); and
(iv) $500,000, shall be paid by delivery of a
contingent convertible note of CDL, with approximately a one (1) year term
payable to the Shareholder substantially in the form of Exhibit B hereto (the
"One Year Note", together with the Five Year Note, the "Notes").
(c) The One Year Note is subject to reduction or
discharge if the Company's earnings before interest and taxes, computed in
accordance with GAAP, for the one year period ended July 31, 1999, is less than
$700,000. Reduction is on a dollar for dollar basis for the amount of the EBIT
Shortfall. The reduction is more fully described in the One Year Note.
Section 2.3.......Retained Liabilities. The Shareholder shall remain
liable for any litigation or other contingent liabilities (including but not
limited to any tax liabilities not accrued for on the Financial Statements, any
interest or penalties due with respect to any tax liabilities, and any
liabilities arising from the Company's failure to qualify as a foreign
corporation in any state) listed on the Schedules to this Agreement
notwithstanding such disclosure.
Section 2.4.......Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place at the offices of Lowenstein Sandler PC,
65 Livingston Avenue, Roseland, New Jersey, at 10:00 A.M. on August 5, 1998 or
by facsimile on such date with original documents to follow; provided that, if
the conditions set forth in Article VII have not been either satisfied or waived
by such date, then the Closing shall occur within five Business Days of the
satisfaction or waiver of such conditions or at such other time and place as is
mutually agreed by the parties hereto. The time and date of the Closing is
herein called the "Closing Date".
ARTICLE III
Representations and Warranties Regarding the Company
The Shareholder represents and warrants to Purchaser and CDL as
follows:
Section 3.1.......Organization and Qualification of the Company. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of North Carolina, with full power and authority,
corporate and other, to own or lease its properties and assets and to carry on
its business as presently conducted, and is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction listed in
Schedule 3.1, which constitute all of the jurisdictions in which the Company is
currently conducting its business (except for three states as to which the
Shareholder is currently in the process of qualifying the Company to do business
and which the Shareholder undertakes to complete expeditiously). The Company has
previously provided to Purchaser and CDL true and complete copies of (i) its
Certificate of Incorporation and all amendments thereto, and (ii) its by-laws
and all amendments thereto. Other than as indicated on Schedule 3.1 the business
of the Company is conducted solely through the Company and the Company does not
own, directly or indirectly, any subsidiaries. The Shareholder has no interest
in any business engaged in air or ground messenger, courier or small package
delivery services (the "Business") other than the Company.
Section 3.2.......Authorization. The Company 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 duly authorized, executed
and delivered by the Company and constitutes a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms.
Section 3.3.......Non-contravention. Neither the execution and delivery
of this Agreement nor the performance by the Company of its obligations
hereunder will (i) contravene any provision contained in its 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 Company is a party or by which
it is bound or to which any of its assets or properties are subject, or (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 assets or properties of the
Company.
Section 3.4.......No Consents. Except as set forth in Schedule 3.4, 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 Company.
Section 3.5.......Capitalization. The Company's authorized capital
stock consists solely of 100,000 authorized shares of Company Common Stock of
which 100 shares of Company Common Stock are issued and outstanding. The Company
does not have any shares of its capital stock reserved for issuance and the
Company does not have any outstanding options, warrants, rights, calls or
commitments relating to its capital stock or any outstanding securities or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire from it, any shares of its capital stock. There are
no pre-emptive or other subscription rights with respect to any shares of the
capital stock of the Company and all of the issued and outstanding shares of the
capital stock of the Company have been duly authorized, validly issued, are
fully paid and are nonassessable.
Section 3.6.......Personal Property. The Company has good and
marketable title to (or valid leasehold or contractual interests in) all
personal property used in its business, free and clear of any Encumbrances
except as set forth in Schedule 3.6. To the Shareholder's knowledge, all
machinery, equipment, furniture, fixtures and other personal property of the
Company is in good operating condition and fit for operation in the ordinary
course of business (subject to normal wear and tear).
Section 3.7.......Leased Real Property. Except as set forth in Schedule
3.7, the Company has valid leasehold title to all real estate and real property
used in its business (the "Leased Real Property"), free and clear of all
Encumbrances. To the Shareholder's knowledge, all plants, structures and
buildings leased by of the Company are in good operating condition and fit for
operation in the ordinary course of business (subject to normal wear and tear)
with no structural or other defects that could interfere with the conduct of
normal operation of such facilities. The Company has delivered to Purchaser and
CDL true and complete copies of any leases for the Leased Real Property. To the
Shareholder's knowledge with respect to buildings not owned by the Shareholder,
the Company is not in violation of any building, zoning, anti-pollution, health,
occupational safety or other law, ordinance or regulation regarding its plants,
structures and equipment or their operations.
Section 3.8.......Financial Statements. The Company has previously
furnished to Purchaser and CDL (i) a true and complete copy of the audited
balance sheets of the Company, taken as a whole, as of March 31, 1998 and the
related statements of income, cash flows and changes in stockholders' equity for
the three (3) years then ended, certified by the independent accountants of the
Company, and (ii) a true and complete copy of an unaudited balance sheet of the
Company as of June 30, 1998 and the related statements of income, cash flows and
changes in stockholders' equity for the three month period then ended,
(collectively, the "Financial Statements"). The Financial Statements have been
prepared in conformity with GAAP, applied on a consistent basis and present
fairly the financial condition and results of operations of the Company as of
and for the periods included therein.
Section 3.9.......Absence of Certain Developments. Except as set forth
in Schedule 3.9, since March 31, 1998, there has not been any Material Adverse
Change, or any development which could reasonably be expected to result in a
prospective Material Adverse Change. Except as set forth in Schedule 3.9, since
March 31, 1998, the Company has conducted its businesses in the ordinary and
usual course consistent with past practices and has not (i) sold, leased,
transferred or otherwise disposed of any of its assets (other than dispositions
in the ordinary course of business consistent with past practices), (ii)
terminated or amended in any material respect any contract or lease to which it
is a party or to which it is bound or to which its properties are subject, (iii)
amended its Certificate of Incorporation or by-laws or taken any action in
contemplation of an amendment to such Certificate of Incorporation or by-laws or
in contemplation of its liquidation or dissolution and, to its best knowledge
after due investigation, no such action has been taken by its Shareholder,
directors or officers, (iv) declared or paid any dividend or distribution on its
capital stock, or repurchased or otherwise acquired any shares of its capital
stock or any option, warrant, right, call or commitment relating to its capital
stock or any outstanding securities or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire
from it, any shares of its capital stock, (v) suffered any material loss, damage
or destruction whether or not covered by insurance, (vi) made any change in the
accounting methods or practices it follows, whether for general financial or tax
purposes, (vii) incurred any liabilities (other than in the ordinary course of
business) none of which, individually or in the aggregate, are material, (viii)
incurred, created or suffered to exist any Encumbrances on its assets, except
those created in the ordinary course of business, none of which, individually or
in the aggregate, are material, (ix) increased the compensation payable or to
become payable to any of its officers or employees or increased any bonus,
severance, accrued vacation, insurance, pension or other Employee Benefit Plan,
payment or arrangement made by it for or with any such officers or employees,
(x) suffered any labor dispute, strike or other work stoppage, (xi) made or
obligated itself to make any capital expenditures in excess of $10,000
individually or in the aggregate, (xii) entered into any contract or other
agreement requiring it to make payments in excess of $10,000 per annum,
individually or in the aggregate, other than in the ordinary course of business
consistent with past practices, or (xiii) entered into any agreement to do any
of the foregoing.
Section 3.10......Governmental Authorizations; Licenses; Etc. The
business of the Company has been operated in compliance with all material
applicable laws, rules, regulations, codes, ordinances, orders, policies and
guidelines of all Governmental Authorities, including but not limited to, those
related to: fire, safety, labeling of products, pricing, sales or distribution
of products, antitrust, trade regulation, trade practices, sanitation, land use,
employment or employment practices, energy and similar laws (but excluding
parking and minor traffic violations). To the knowledge of the Shareholder, the
Company has all permits, licenses, approvals, certificates and other
authorizations, and has made all notifications, registrations, certifications
and filings with all Governmental Authorities, necessary or advisable for the
operation of its business as currently conducted. There is no action, case or
proceeding pending or, to the best knowledge of the Company, threatened by any
Governmental Authority with respect to (i) any alleged violation by the Company
or its Affiliates of any law, rule, regulation, code, ordinance, order, policy
or guideline of any Governmental Authority, or (ii) any alleged failure by the
Company or its Affiliates to have any permit, license, approval, certification
or other authorization required in connection with the operation of its
business. No notice of any violation of such laws has been received by the
Company or any of its Affiliates.
Section 3.11......Litigation. Except as set forth in Schedule 3.11,
there are no lawsuits, actions, proceedings, claims, arbitrations, orders or
investigations by or before any Governmental Authority pending or, to the best
knowledge of the Company, threatened against the Company or its Affiliates
relating to such Company, its business or any product or service alleged to have
been sold by such Company or seeking to enjoin the transactions contemplated
hereby and, except as set forth in Schedule 3.11, there are no facts or
circumstances known to the Company that could result in a claim for damages or
equitable relief which, if decided adversely, could reasonably be expected to
result in a Material Adverse Change, individually or in the aggregate.
Section 3.12......Undisclosed Liabilities. Other than those reflected
in the Financial Statements, there are no material (defined below) liabilities
of the Company of any kind or nature whatsoever, whether known or unknown,
absolute, accrued, contingent or otherwise, or whether due or to become due,
other than liabilities incurred in the ordinary course of business and
consistent with past practices since the date of the Financial Statements, and
to the Shareholder' knowledge, there exists no facts or circumstances (other
than general economic conditions) that could reasonably be expected to result in
any such liability. "Material" liabilities means liabilities that in the
aggregate exceed $10,000.
Section 3.13......Taxes. All federal, state, county, local and foreign
tax returns and reports of the Company required to be filed have been duly
filed. All federal, state, county, local, foreign and any other taxes (including
all income, withholding and employment taxes), assessments (including interest
and penalties), fees and other governmental charges with respect to the
employees, properties, assets, income or franchises of the Company have been
paid or duly provided for, or are being contested in good faith by appropriate
proceedings as disclosed on Schedule 3.13 and adequate reserves therefor have
been established pursuant to GAAP, and are reflected on the Financial
Statements. There are no tax liens on any of the assets of the Company.
Section 3.14......Insurance. Schedule 3.14 sets forth a true and
correct list of all insurance policies or binders maintained by the Company on
the date hereof showing, as to each policy or binder, the carrier, policy
number, coverage limits, expiration dates, annual premiums, deductibles or
retention levels and a general description of the type of coverage provided.
Such policies and binders are, and at all times prior to the Closing will be, in
full force and effect. The Company has not permitted or suffered any gap in
insurance coverage during the past six years.
Section 3.15......Environmental Matters. Except as set forth on
Schedule 3.15, to the knowledge of the Shareholder, (i) the business of the
Company is being and has been conducted in compliance with all Environmental
Laws, (ii) the real property owned, leased or operated by the Company
(including, without limitation, soil, groundwater or surface water on, under or
adjacent to the properties and buildings thereon) (the "Affected Property") does
not contain any Regulated Substance other than as permitted under applicable
Environmental Laws, (iii) the Company has, and at all times has had, all
permits, licenses and other approvals and authorizations required under
applicable Environmental Laws for the operation of the business of the Company,
(iv) the Company has not received any notice from any Governmental Authority
that the Company or any of its Affiliates may be a potentially responsible party
in connection with any waste disposal site or facility used, directly or
indirectly, by or otherwise related to the Company, (v) no reports have been
filed, or have been required to be filed, by the Company concerning the release
of any Regulated Substance or the violation of any Environmental Law on or at
the properties used in the business of the Company, (vi) no Regulated Substance
has been disposed of, transferred, released or transported from the Affected
Property, other than as permitted under applicable Environmental Law pursuant to
appropriate regulations, permits or authorizations, (vii) there have been no
environmental investigations, studies, audits, tests, reviews, or other analyses
conducted by or which are in the possession of the Company relating to the
business of the Company, true and complete copies of which have not been
delivered to Purchaser and CDL prior to the date hereof, (viii) there are no
underground storage tanks on, in or under any Affected Property and no
underground storage tanks have been closed or removed from any Affected
Property, (ix) the Company has not presently incurred, and the Affected Property
is not presently subject to, any liabilities (fixed or contingent) relating to
any suit, settlement, judgment or claim asserted or arising under any
Environmental Law, (x) all Environmental Laws in existence at the time the
Affected Property was acquired were complied with, and (xi) there are no civil,
criminal or administrative actions, suits, demands, claims, hearings,
investigations or other proceedings pending or threatened against the Company or
any of its Affiliates with respect to the business of the Company relating to
any violations, or alleged violations, of any Environmental Law, and neither the
Company nor any of its Affiliates has received any notices, demand letters or
requests for information, arising out of, in connection with, or resulting from,
a violation, or alleged violation, of any Environmental Law, and neither the
Company nor any of its Affiliates has been notified by any Governmental
Authority or any other Person that the Company has, or may have, any liability
pursuant to any Environmental Law.
Section 3.16......Employee Matters.
(a) Schedule 3.16 contains a true and complete list as of June 30, 1998
of the employees currently employed by the Company, indicating the title of and
a description of any agreements concerning such employees and a listing of the
rate or range of rates of all current compensation payable by the Company to
each employee.
(b) Except as set forth on Schedule 3.16, (i) the Company has not
entered into any collective bargaining agreements regarding its employees, (ii)
there are no written personnel policies applicable to such employees generally,
other than employee manuals, true and complete copies of which have previously
been provided to Purchaser and CDL, (iii) there is no labor strike, dispute,
slowdown or work stoppage or lockout pending or, to the best knowledge of the
Company, threatened against or affecting the Company and during the past three
years there has been no such action, (iv) to the best knowledge of the Company,
no union organization campaign is in progress with respect to any of the
employees, and no question concerning representation exists respecting such
employees, (v) there is no unfair labor practice, charge or complaint pending
or, to the best knowledge of the Company, threatened against the Company, and
(vi) the Company has not entered into any agreement, arrangement or
understanding restricting its ability to terminate the employment of any or all
of its employees at any time, for any lawful or no reason, without penalty or
liability.
Section 3.17......Employee Benefit Plans. Schedule 3.17 lists all
bonus, deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase, restricted stock
and stock option plans, all employment or severance contracts, health and
medical insurance plans, life insurance and disability insurance plans, other
material employee benefit plans, contracts or arrangements which cover employees
or former employees of the Company including, but not limited to, "employee
benefit plans" within the meaning of Section 3(3) of ERISA (the "Employee
Benefit Plans"). The Employee Benefit Plans which are described in Section 3(3)
of ERISA (the "ERISA Plans") are in compliance in all material respects with the
applicable provisions of ERISA and, if intended to be tax qualified, Sections
401(a) and 501(a) of the Code. All ERISA Plans which are intended to qualify
under Section 401(a) of the Code have been submitted to and approved under
Section 401(a) of the Code by the Internal Revenue Service or, alternatively,
the applicable remedial amendment period with respect to any such ERISA Plan
will not have ended prior to the Closing Date. No liability under Subtitle C or
D of Title IV of ERISA has been or is expected to be incurred by the Company or
any of its Affiliates with respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the single-employer plan of
any entity which is considered one employer with the Company under Section 4001
of ERISA or Section 414 of the Code (an "ERISA Affiliate"). Except as set forth
on Schedule 3.17, neither the Company nor any of its Affiliates have incurred or
expect to incur any withdrawal liability with respect to a multi-employer plan
under Subtitle E of Title IV of ERISA (regardless of whether based on
contributions of an ERISA Affiliate).
Section 3.18......Proprietary Rights.
(a) All of the Company's patents, patent registrations, patent
applications, trademarks, service marks, trademark and service mark
registrations and applications therefor, copyrights, copyright registrations,
copyrights applications, trade names, corporate names, technology, inventions,
computer software, data and documentation (including electronic media), product
drawings, trade secrets, know-how, customer lists, processes, other intellectual
property and proprietary information or rights; and permits, licenses or other
agreements to or from third parties regarding the foregoing (the "Proprietary
Rights") are listed in Schedule 3.18. Except as disclosed therein, the Company,
either jointly or individually, owns and possesses all right, title and interest
in the Proprietary Rights. The Company has taken all necessary or desirable
action to protect the Proprietary Rights and the transactions contemplated by
this Agreement will have no material adverse effect on the Company's right,
title and interest in the Proprietary Rights.
(b) No claim by any third party contesting the validity,
enforceability, use or ownership of any Proprietary Right has been made, is
currently pending or, to the best knowledge of the Company, is threatened. The
Company has not received any notice nor is it aware of any fact which indicates
a likelihood of, any infringement or misappropriation by, or conflict with, any
third party with respect to any of the Proprietary Rights. The Company has not
infringed, misappropriated or otherwise conflicted with any rights of any third
parties, nor is it aware of any infringement, misappropriation or conflict which
will occur as a result of the continued operation of the business of the Company
as now conducted.
Section 3.19......Accounts Receivable. Schedule 3.19 sets forth a true
and complete listing of all accounts and notes receivable and all reserves
related thereto, deposits, advances and manufacturer and supplier rebates (the
"Accounts Receivable") as of June 30, 1998 and an aging Schedule reflecting the
aggregate amount of all Accounts Receivable outstanding (i) 30 days or less,
(ii) more than 30 days but less than or equal to 60 days, (iii) more than 60
days but less than or equal to 90 days, and (iv) more than 90 days. All of the
Accounts Receivable have arisen in the ordinary and regular course of business,
represent bona fide transactions with third parties and are not subject to any
counterclaims or offsets (except for those for which adequate reserves have been
established in accordance with GAAP), have been billed and are collectible
within 90 days of the date created. The Shareholder shall update this Schedule
as of the Closing Date, subject to the foregoing representations.
Section 3.20......Contracts.
(a) Schedule 3.20 describes all contracts (except for usual and
ordinary purchase orders executed in the normal course of business), agreements,
leases, commitments, instruments, plans, permits or licenses, whether written or
oral, to which the Company is a party or is otherwise bound, of the type
described below (the "Contracts"):
(i) all agreements or commitments for the sale by the Company
of products or services, or the purchase by the Company of raw
materials, products or services, other than those that are for amounts
not to exceed $10,000;
(ii) all agreements or commitments for the purchase by the
Company of machinery, equipment or other personal property other than
those that are for amounts not to exceed $10,000;
(iii) all capitalized leases, pledges, conditional sale or
title retention agreements;
(iv) all employment agreements and commitments, all consulting
or severance agreements or arrangements and all agreements between the
Company and the Shareholder, any Affiliate of the Shareholder or any
other officer, director or employee of the Company;
(v) all agreements relating to the consignment or lease of
personal property (whether the Company is lessee, sublessee, lessor or
sublessor), other than such agreements that provide for annual payments
of less than $5,000;
(vi) all license, royalty or other agreements relating to
the Proprietary Rights;
(vii) all agreements prohibiting the Company from freely
engaging in the business presently conducted by the Company in any
geographic area;
(viii) all agreements to provide rebates to customers
of the Company, to the extent not reflected as a liability on the
Financial Statements; and
(ix) any agreement other than those covered by clauses (i)
through (viii) above involving payment or receipt of more than $25,000
in the aggregate.
(b) To the knowledge of the Company, none of the other parties
to any such Contracts intends to terminate or materially alter the material
provisions of such Contracts either as a result of transactions contemplated
hereby or otherwise, except as disclosed in Schedule 3.20.
(c) Except as disclosed in Schedule 3.20, the Company is not
in, nor has 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 material 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
the material Contracts.
(d) True and complete copies of all written Contracts,
including any amendments thereto, have been delivered to Purchaser or CDL and
such documents constitute the legal, valid and binding obligation of the Company
and, to the best knowledge of the Company, each other party purportedly
obligated thereunder.
Section 3.21......Customers and Suppliers. Schedule 3.21 sets forth a
list of (a) the fifteen (15) largest customers of the Company in terms of gross
sales during the year ended March 31, 1998 and (b) the ten (10) largest
suppliers of the Company in terms of purchases during the year ended March 31,
1998. Except as set forth on Schedule 3.21, (a) no customer listed on Schedule
3.21 has notified or otherwise indicated to the Company that it will stop, or
decrease the rate of, its purchases of services from the Company, and no
customer has, during the current fiscal year, ceased or materially decreased its
purchases of any such services from the Company; and (b) no supplier listed on
Schedule 3.21 has notified or otherwise indicated to the Company that it will
stop, or decrease the rate of, or, other than publicly announced generally
applicable price increases, materially increase the cost of, its supply of
materials, products or services used by the Company, and no supplier listed on
Schedule 3.21 has, during the current fiscal year, ceased, materially decreased
the rate of or materially raised the cost of, any such materials, products or
services.
Section 3.22......Books and Records. The stock records of the Company
fairly and accurately reflect the record ownership of all of the outstanding
shares of its capital stock. Since April 1, 1995, the other books and records of
the Company, including financial records and books of account, are complete and
accurate and have been maintained in accordance with GAAP, to the extent
applicable, and sound business practices. The minute books of the Company
contains complete and accurate records of all meetings of, or actions taken
without a meeting by, the shareholders, the Board of Directors or any committee
of the Company. No meetings of the shareholders or of the Board of Directors of
the Company or any of its committees have been held for which minutes have not
been prepared and are not contained in its minute books and no action taken by
it without a meeting is not accurately recorded in its minute books.
Section 3.23......Net Worth of the Company. As of June 30, 1998,
the Company had a tangible net worth of not less than $740,000.
Section 3.24......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 Company in connection with this Agreement or any of the transactions
contemplated hereby, except for Centura Investment Bank pursuant to a letter
agreement dated October 8, 1997. The fees of Centura Investment Bank fees will
be paid solely by the Shareholder.
Section 3.25......Full Disclosure. No representation or warranty made
by the Shareholder or the Company in this Agreement, any Schedule, any Exhibit
or any certificate delivered by or on behalf of the Company pursuant hereto
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
herein or therein not misleading.
ARTICLE IV
Representations and Warranties Regarding the Shareholder
The Shareholder represents and warrants to Purchaser and CDL as
follows:
Section 4.1.......Authorization. The Shareholder has the capacity to
execute and deliver this Agreement and to perform his obligations hereunder. The
Shareholder is not under any impairment or other disability, legal, physical,
mental or otherwise, that would preclude or limit his ability to perform his
obligations hereunder. This Agreement constitutes a binding and valid obligation
of the Shareholder, enforceable against him in accordance with its terms.
Section 4.2.......Non-contravention. Neither the execution and delivery
of this Agreement nor the performance by the Shareholder of their respective
obligations hereunder will (i) 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 any Shareholder is a party or by
which any Shareholder is bound or to which any of his or her assets or
properties are subject, (iii) result in the creation or imposition of any
Encumbrances on any of the assets or properties of the Company, or (iv) result
in the acceleration of, or permit any Person to accelerate or declare due and
payable prior to its stated maturity, any obligation of the Company.
Section 4.3.......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
Shareholder.
Section 4.4.......Ownership of the Company's Shares. The Shareholder
owns 100 shares of the Company's Common Stock beneficially and of record, free
and clear of any Encumbrances which represents all of the issued and outstanding
capital stock of the Company. There are no voting trust arrangements,
shareholder agreements or other agreements (i) granting any option, warrant or
right of first refusal with respect to the Company Common Stock to any Person,
(ii) restricting the right of the Shareholder to sell the Company Common Stock
to Purchaser and CDL, (iii) restricting any other right of any Shareholder with
respect to the Company Common Stock or (iv) creating any penalties, liabilities
or disabilities from a sale of the Company Common Stock. The Shareholder has the
absolute and unrestricted right, power and capacity to sell, assign and transfer
the Company Common Stock to Purchaser and CDL free and clear of any
Encumbrances. Upon delivery to Purchaser and CDL of the certificates
representing the Company Common Stock at Closing in exchange for the
consideration to be paid by Purchaser and CDL at the Closing, Purchaser and CDL
will acquire good, valid and marketable title to the Company Common Stock, free
and clear of any Encumbrances.
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 in connection with this Agreement or any of the transactions
contemplated hereby.
Section 4.6.......Full Disclosure. No representation or warranty made
by any Shareholder in this Agreement, any Schedule, any Exhibit or any
certificate delivered, or to be delivered, by or on behalf of any Shareholder
pursuant hereto contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.
ARTICLE V
Representations and Warranties Regarding Purchaser
and CDL
Purchaser and CDL, jointly and severally, represent and warrant to the
Shareholder as follows:
Section 5.1.......Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida and has full power and authority, corporate and other, to own or lease
its property and assets and to carry on its business as presently conducted. CDL
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has full power and authority, corporate and
other, to own or lease its property and assets and to carry on its business as
presently conducted.
Section 5.2.......Authorization. Each of Purchaser and CDL has full
power and authority, corporate and other, to execute and deliver this Agreement
and to perform its respective obligations hereunder, all of which have been duly
authorized by all requisite corporate action. This Agreement has been duly
authorized, executed and delivered by Purchaser and CDL, respectively, and
constitutes a valid and binding agreement such party, enforceable against such
party in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principals.
Section 5.3.......Non-contravention. Neither Purchaser nor CDL is
subject to any provision of its respective 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 5.4.......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
Purchaser and CDL.
Section 5.5.......Brokers. No Person is or will be entitled to a
broker's, finder's, investment banker's, financial adviser's or similar fee from
either Purchaser or CDL in connection with this Agreement or any of the
transactions contemplated hereby.
Section 5.6.......SEC Documents. CDL has delivered to the Stockholder
(who represents that he, or such Stockholder's purchaser representative, has
read and reviewed) CDL's Form 10-K for the year ended December 31, 1997, its
Form 10-Q for the quarter ended March 31, 1998, its Form 8-K for an event in
July 1998 and its proxy statement for its annual meeting held on June 17, 1998
(the "SEC Documents") and no other documents have been filed since the filing of
the Company's Form 10-Q. The SEC Documents adequately and correctly describe the
business of CDL as at their respective dates, and the Shareholder may rely
thereon. The SEC Documents do not contain any untrue statement of a material
fact nor omit to state a material fact necessary to make the statements
contained therein not misleading. There is no fact or circumstance that
Purchaser and CDL have not disclosed to the Shareholder that Purchaser or CDL
presently believe has resulted in a Material Adverse Change or could reasonably
be expected to have a Material Adverse Effect on the ability of Purchaser or CDL
to perform their obligations under this Agreement.
ARTICLE VI
Covenants and Agreements
Section 6.1.......Access and Information. No investigation by Purchaser
and CDL heretofore or hereafter made shall modify or otherwise affect any
representations and warranties of the Company or the Shareholder, which shall
survive any such investigation, or the conditions to the respective obligations
of Purchaser and CDL to consummate the transactions contemplated hereby.
Section 6.2.......Transfer and Other Taxes.
(a)......The Shareholder represents that there are no stamp,
stock transfer, sales, purchase, use or similar tax under the laws of any
Governmental Authority of North Carolina arising out of or resulting from the
purchase of the Company Shares.
(b)......Each party hereto shall (i) prepare and file all
income and other tax returns reporting income or other taxes due through the
Closing Date, (ii) be responsible for the conduct of all tax examinations
relating to its, his of her respective tax returns referred to in (i) above, and
(iii) pay all taxes owing with respect to his or her respective tax returns
referred to in (i) above. The Shareholder shall also be responsible for filing
any income tax returns and paying any income taxes (to the extent such taxes
have not been reserved in the Financial Statements of the Company) for the
Company for a fiscal year or reporting period which ends on or before the
Closing Date. Purchaser will provide the Shareholder and their accountants with
reasonable access to books and records necessary for the preparation of such
returns.
Section 6.3.......Non-Competition and Confidentiality Agreement.
(a)......The Shareholder agrees that he will not, and he
will cause his respective Affiliates not to, directly or indirectly, take any of
the following actions:
.........(i) engage in or compete with the provision of
products or services offered by CDL or any of its subsidiaries, including
without limitation Purchaser, anywhere in the State of North Carolina or within
250 miles of its borders (the "Territory");
.........(ii) engage, contract for or solicit, with
respect to the provision of products or services offered by CDL or any of its
subsidiaries, (x) any customers of CDL or any of its subsidiaries, including
without limitation Purchaser, or (y) any customers of the Company in the two
year (2) period preceding the Closing;
.........(iii) employ, engage, contract for or solicit
the services in any capacity of any Person who is employed by or an independent
contractor of the Company either on the date hereof or on the date of such
solicitation; or
.........(iv) use for his or her own benefit or, except
as required by law, divulge or convey to any third party, any Confidential
Information (as hereinafter defined) relating to the Company.
(b)......Each of the foregoing covenants, except the covenant
set forth in Section 6.4(a)(ii), shall continue for a period of three (3) years
from the Closing Date; provided, however, that if Shareholder is employed by CDL
or any of its subsidiaries, including without limitation Purchaser, he shall
continue to be bound by such covenants for a period of two (2) years after the
date on which his employment ceases for any reason or no reason. The covenant
set forth in Section 6.4(a)(ii) shall continue for a period equal to the longer
of five (5) years from the Closing Date; or two (2) years after the date on
which such Shareholder's employment ceases for any reason or no reason. The
Shareholder agrees that the time periods set forth in the preceding sentences
shall be computed by excluding from such periods any time during which such
Shareholder is in violation of any provision of this Section 6.3.
(c)......Notwithstanding the foregoing, the covenants set
forth in this Section 6.3 shall not be deemed to prohibit the Shareholder from
acquiring, as an investment, not more than one percent (1%) of the capital stock
of a competing business whose stock is traded on a national securities exchange
or over-the-counter.
(d)......The Shareholder acknowledges that the restrictions
contained in this Section 6.3 are reasonable and necessary to protect the
legitimate interests of Purchaser and CDL and that any breach by the Shareholder
of any provision hereof will result in irreparable injury to Purchaser and CDL.
The Shareholder acknowledges that, in addition to all remedies available at law,
Purchaser and CDL shall be entitled to equitable relief, including injunctive
relief, and an equitable accounting of all earnings, profits or other benefits
arising from such breach and shall be entitled to receive such other damages,
direct or consequential, as may be appropriate. Neither Purchaser nor CDL shall
be required to post any bond or other security in connection with any proceeding
to enforce this Section 6.4.
(e)......All of the covenants set forth in this Section 6.3
shall be construed as an agreement independent of any other provision of this
Agreement, and the existence of any claim of the Shareholder against the
Purchaser or CDL shall not constitute a defense to the enforcement of such
covenants.
(f)......For purposes of this Section 6.3, "Confidential
Information" consists of all information, knowledge or data relating to either
of the Company including, without limitation, customer and supplier lists,
formulae, trade know-how, processes, secrets, consultant contracts, pricing
information, marketing plans, product development plans, business acquisition
plans and all other information relating to the operation of such Company not in
the public domain or otherwise publicly available. Information which enters the
public domain or is publicly available loses its confidential status hereunder
so long as neither the Shareholder nor his Affiliates, directly or indirectly,
cause such information to enter the public domain.
Section 6.4.......Guarantees. The Purchaser will relieve the
Shareholder and his spouse of personal guarantee or co-maker obligations for any
bank indebtedness or finance leasing obligations of the Company listed on
Schedule 6.4 within 90 days of the date hereof.
Section 6.5.......Operations of the Company in Cary, North Carolina.
The Leased Real Property in Cary, North Carolina is owned by the Shareholder and
his wife. The Shareholder and the Purchaser will negotiate a lease within 60
days have Closing permitting the Company to continue to use such facility
containing the following material terms: 5 year lease term, $14.50 per square
foot triple net and 6,000 square feet. The Shareholder also owns property used
by the Company in Charlotte, North Carolina. The Shareholder and the Purchaser
will negotiate a mutually acceptable lease for such premises within 60 days of
closing at no higher than a fair market rental.
Section 6.6.......Audited Financial Statements of the Company; SEC and
Other Governmental Disclosure and Reporting Requirements. All fees and expenses
incurred in connection with any audits of the financial statements of the
Company, including without limitation the audited financial statements of the
Company for the twelve months ended March 31, 1998, shall be the sole
responsibility of the Shareholder.
Section 6.7.......Certain Reporting Requirements. Unless and until all
of the shares which are or could be issued under the Notes (the "Underlying
Shares") are sold or eligible for sale under Rule 144(k) of the SEC, CDL will
remain current in filing all reports with the SEC necessary to allow transfer of
the Underlying Shares if otherwise eligible for sale under Rule 144.
Section 6.8.......Conduct of Business. Until July 31, 1999, the
Purchaser will not make any material changes in the operation of the Seller from
the manner it is currently being operated without the consent of the Shareholder
(which consent shall not be unreasonably withheld or delayed) if such change
would have a material adverse effect on the KBD EBIT, as defined on the One Year
Note; provided however that the foregoing shall not impair CDL's and the
Purchaser's right to manage its subsidiary except as expressly stated herein.
Section 6.9.......Best Efforts; Further Assurances. Subject to the
terms and conditions herein provided, each of the parties hereto shall use its
best efforts to take, or cause to be taken, all action, and to do, or cause to
be done, all things reasonably necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. Each of the Company, the Shareholder, Purchaser
and CDL will use their respective best efforts to obtain consents of all
Governmental Authorities and third parties necessary to the consummation of the
transactions contemplated by this Agreement. The Company and the Shareholder
shall use their respective reasonable best efforts to assist Purchaser and CDL
in connection with the fulfillment of any SEC disclosure, reporting or other
governmental compliance obligation of Purchaser and CDL, including without
limitation providing Purchaser and CDL with any financial and other information
requested by Purchaser and CDL. In the event that at any time after Closing any
further action is necessary to carry out the purposes of this Agreement, each of
the Company, the Shareholder, Purchaser and CDL agree shall take all such action
as may be required without any further consideration therefor.
Section 6.10......Reservation of Underlying Shares. The authorized
capital stock of CDL is 30,000,000 shares of common stock and 2,000,000 shares
of preferred stock. Until such time as the Notes are no longer subject to
conversion into shares of common stock of CDL, as provided by the Notes, CDL
agrees to take such action as is necessary to ensure that an adequate number of
shares of CDL are authorized, unissued and reserved for issuance upon conversion
of the Notes (including, if necessary, increasing the authorized number of
shares of common stock). CDL represents and warrants that as of the date hereof
sufficient shares of authorized CDL common stock exist and have been reserved
for issuance upon conversion of the entire principal amount of the Notes at the
initial conversion price.
ARTICLE VII
Closing Deliveries
Section 7.1.......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 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.
Section 7.2.......Deliveries by the Company and the Shareholder. The
obligations of Purchaser and CDL 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) (i) All authorizations, consents, waivers, approvals or other
actions required in connection with the execution, delivery and performance of
this Agreement by the Company and the Shareholder and the consummation by the
Company and the Shareholder of the transactions contemplated hereby shall have
been obtained and shall be in full force and effect; (ii) the Company and the
Shareholder shall have obtained any authorizations, consents, waivers, approvals
or other actions required to prevent a material breach or default by the Company
under any contract to which such Company is party or for the continuation of any
agreement to which such Company is a party; and (iii) all authorizations,
consents, waivers, approvals or other actions necessary to permit Purchaser to
own the Company Shares shall have been obtained and shall be in full force and
effect. By Closing, the Shareholder shall be deemed to have represented and
warranted that such conditions have been fulfilled.
(b) Prior to or at the Closing, (i) the Shareholder shall have
delivered to the Company, as applicable, for cancellation the certificates
representing the Company Common Stock, (ii) the Company shall have canceled such
certificates, and (iii) the Company shall have issued to Purchaser new
certificates representing the Company Common Stock registered in the name of
Purchaser or as otherwise directed by it.
(c) Prior to or at the Closing, the Shareholder and the Company shall
have delivered such other closing documents as shall be requested by Purchaser
and CDL in form and substance reasonably acceptable to counsel for Purchaser and
CDL, including the following:
(i) a certificate of the Secretary or Assistant Secretary of
the Company, dated the Closing Date, as to the incumbency of any
officer of the Company executing this Agreement or any document related
thereto and covering such other matters as Purchaser and CDL may
reasonably request;
(ii) a certified copy of (1) the Certificate of Incorporation
and by-laws of the Company and all amendments thereto, and (2) the
resolutions of the Board of Directors of the Company authorizing the
execution, delivery and consummation of this Agreement and the
transactions contemplated hereby;
(iii) The Shareholder shall enter into an employment agreement
(the "Employment Agreement") with Purchaser, which agreement shall be
in substantially the same form as attached Exhibit D;
(iv) documents evidencing the Cary, North Carolina Lease
and any required landlord consents
to the Company's other real estate leases;
(v) an opinion of Howard, Stallings, Story, Wyche, From &
Hutson, P.A., counsel to the Company and the Shareholder, dated the
Closing Date, and substantially in the form attached as Exhibit E; and
(vi) such other documents or instruments as Purchaser and CDL
reasonably requests to effect the transactions contemplated hereby.
(d) Prior to or at the Closing, (i) the Company shall have received the
written resignation of all directors and officers of each of the Company,
effective as of the Closing, (ii) the Company, or the Shareholder, as the sole
stockholders of the Company, shall have taken all action necessary to elect as
successor directors and officers effective as of the Closing such persons as
shall be directed by Purchaser and CDL, and (iii) Purchaser and CDL shall have
received evidence satisfactory to it in its sole discretion of all of the
foregoing.
Section 7.3.......Deliveries by CDL and Purchaser. The obligations of
the Shareholder 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) Prior to or at the Closing, Purchaser and CDL shall have delivered
to the Shareholder such closing documents as shall be reasonably requested by
the Shareholder in form and substance reasonably acceptable to its counsel,
including the following:
(i) a certificate of the Secretary or Assistant Secretary of
each of Purchaser and CDL, dated the Closing Date, as to the incumbency
of any officer thereof executing this Agreement or any document related
thereto and covering such other matters as the Shareholder may
reasonably request;
(ii) a certified copy of the resolutions of the Board of
Directors of Purchaser authorizing the execution, delivery and
consummation of this Agreement and the transactions contemplated hereby
and thereby;
(iii) the Shareholder shall have executed the Employment
Agreement;
(iv) an opinion of Lowenstein Sandler PC, counsel to
Purchaser and CDL, dated the Closing Date, and substantially
in the form attached as Exhibit F;
(v) payment of the Cash Portion Purchase Price, as set
forth in Section 2.2;
(vi) delivery of the One Year Note and the Five Year Note;
and
(vii) such other documents or instruments as the Shareholder
reasonably requests to effect the transactions contemplated hereby.
ARTICLE VIII - Intentionally Omitted
ARTICLE IX
Survival of Representations and Warranties; Indemnification
Section 9.1.......Survival of Representations and Warranties. Except as
set forth below, the representations and warranties provided for in this
Agreement shall survive the Closing for three (3) years from the Closing Date
for the benefit of the parties hereto and their successors and assigns. The
representations and warranties provided for in Sections 3.13 and 3.15 shall
survive the Closing and remain in full force and effect for the greater of five
(5) years or the applicable statute of limitations periods. The survival period
of each representation or warranty as provided in this Section 9.1 is
hereinafter referred to as the "Survival Period."
Section 9.2.......Indemnification.
(a) The Shareholder shall indemnify and hold harmless Purchaser, CDL,
their respective Affiliates, officers, directors, employees, agents and
representatives, and any Person claiming by or through any of them, 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 Shareholder or the
Company in this Agreement for the applicable Survival Period, or (ii) the breach
by Shareholder or the Company of any covenant or agreement to be performed by
him or it hereunder or (iii) any tax or other material liabilities of the
Company for periods prior to the Closing Date which were not accrued for on the
June 30, 1998 balance sheet delivered pursuant to Section 3.8.
(b) CDL and Purchaser shall indemnify and hold harmless the
Shareholder, his Affiliates, and any Person claiming by or through him, against
and in respect of any and all Damages arising out of, resulting from or incurred
in connection with (i) any material inaccuracy in any representation or the
breach of any warranty made by Purchaser or CDL in this Agreement for the
applicable Survival Period, or (ii) the material breach by Purchaser or CDL of
any covenant or agreement to be performed by it hereunder or (iii) any material
liability of the Shareholder under a personal guarantee of the Company's
business obligations.
(c) Any Person providing indemnification pursuant to the provisions of
this Section 9.2 is hereinafter referred to as an "Indemnifying Party" and any
Person entitled to be indemnified pursuant to the provisions of this Section 9.2
is hereinafter referred to as an "Indemnified Party."
Section 9.3.......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 (in which case the Indemnified Party may defend against such
injunctive or equitable relief without affecting its claim for indemnification
hereunder), or (ii) the Indemnified Party shall have reasonably concluded that
the Indemnified Party has one or more defenses not available to the Indemnifying
Party (in which case the Indemnified Party shall nonetheless permit the
Indemnifying Party to have meaningful participation in the litigation).
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
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 Third Party
Claim 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 9.4.......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 9.5.......Right of Set-Off. Subject to Section 9.6, Purchaser,
the Company and CDL shall have the right to set-off, against any amount which
may be owed by the Company, Purchaser and/or CDL to the Shareholder (including
but not limited to amounts due under the Notes) any amount owed to Purchaser,
and/or the Company by the Shareholder pursuant to this Agreement or otherwise.
This Section 9.5 shall not be construed so as to afford Purchaser and CDL any
rights of set-off with respect to the One Year Note except as provided in such
Note.
Section 9.6.......Limits on Indemnification. Notwithstanding the
foregoing, no claim for indemnification or setoff shall be made hereunder with
respect to the first $50,000 of losses suffered by either CDL, Purchaser or the
Company on the one hand, or the Shareholder, on the other. No right of set-off
may be exercised or allowed with respect to a Note once the Note has been
converted into Common Stock.
ARTICLE X
Miscellaneous
Section 10.1......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 Purchaser or CDL: 380 Allwood Road
Clifton, New Jersey 07021
Telephone: (973) 471-1005
Facsimile: (973) 471-5519
Attention: Mark Carlesimo, General Counsel
With a copy to: Lowenstein Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068
Telephone: (973) 992-8700
Facsimile: (973) 992-5820
Attention: Alan Wovsaniker, Esq.
If to the Shareholder: Mr. David Chesney
1605 Dunblane Court
Cary, North Carolina 37511
Telephone: 919-362-9826
With a copy to: Howard, Stallings, Story, Wyche, From & Huston, P.A.
P.O. Box 12347
4000 West Chase Boulevard
Suite 400
Raleigh, North Carolina 27605
Telephone: (919) 821-7700
Facsimile: (919) 821-7703
Attention: E. Cader Howard, Esq.
or to such other address as any party hereto shall notify the other parties
hereto (as provided above) from time to time.
Section 10.2. Expenses. Regardless of whether the transactions
provided for in this Agreement are consummated, each party hereto shall pay its
own expenses incident to this Agreement and the transactions contemplated
herein.
Section 10.3. 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 10.4. Assignment; Successors and Assigns; No Third Party
Rights. Except as otherwise provided herein (or in the Note), this Agreement may
not be assigned by operation of law or otherwise, and any attempted assignment
shall be null and void. Purchaser and CDL may assign all of their respective
rights under this Agreement to any Affiliate; provided such Affiliate assumes
all of the obligations of the respective obligations of the Purchaser and CDL
hereunder and CDL and Purchaser remain liable on all of their obligations
hereunder. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors, assigns and legal
representatives. This Agreement shall be for the sole benefit of the parties to
this Agreement and their respective heirs, 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 heirs, successors, assigns
and legal representatives, any legal or equitable right, remedy or claim
hereunder.
Section 10.5. 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 10.6. Titles and Headings; Schedules. 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 10.7. 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 10.8. 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 10.9. Public Announcement. Except with respect to filings
required by the SEC to be made Purchaser and CDL and as may be otherwise
required by law, the Company and the Shareholder, on the one hand, and Purchaser
and CDL, on the other hand, shall not 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. 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 10.10. 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 10.11. 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 10.12. No Strict Construction. Each of the parties to this
Agreement acknowledge that this Agreement has been prepared jointly by the
parties hereto, and shall not be strictly construed against any party.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
KBD SERVICES, INC.
By:_/s/ David L. Chesney
Name:David L. Chesney
Title: President
/s/ David L. Chesney
David L. Chesney
SILVER STAR EXPRESS, INC.
By: /s/ Mark Carlesimo
Name: Mark Carlesimo
Title: Vice President
CONSOLIDATED DELIVERY & LOGISTICS, Inc.
By: /s/ Albert W. Van Ness, Jr.
Name: Albert W. Van Ness, Jr.
Title: Chairman
<PAGE>
-iii-
TABLE OF CONTENTS
Article I - Certain Definitions
Section 1.1. Certain Definitions.....................................1
Section 1.2. Interpretation..........................................4
Article II - Purchase and Sale of Stock; Additional
Covenants
Section 2.1. Purchase and Sale of Stock..............................4
Section 2.2. Purchase Price..........................................4
Section 2.3. Balance Sheet Adjustment; Retained Liabilities..........5
Section 2.4. Closing.................................................5
Article III - Representations and Warranties Regarding the
Company
Section 3.1. Organization and Qualification of the Company...........6
Section 3.2. Authorization...........................................6
Section 3.3. Non-contravention.......................................6
Section 3.4. No Consents.............................................6
Section 3.5. Capitalization..........................................7
Section 3.6. Personal Property.......................................7
Section 3.7. Leased Real Property....................................7
Section 3.8. Financial Statements.......................... .........7
Section 3.9. Absence of Certain Developments.........................7
Section 3.10. Governmental Authorizations; Licenses; Etc..............8
Section 3.11. Litigation..............................................9
Section 3.12. Undisclosed Liabilities.................................9
Section 3.13. Taxes...................................................9
Section 3.14. Insurance...............................................9
Section 3.15. Environmental Matters...................................9
Section 3.16. Employee Matters.......................................10
Section 3.17. Employee Benefit Plans.................................11
Section 3.18. Proprietary Rights.....................................11
Section 3.19. Accounts Receivable ...................................12
Section 3.20. Contracts..............................................12
Section 3.21. Customers and Suppliers................................13
Section 3.22. Books and Records......................................13
Section 3.23 Net Worth of the Company...............................14
Section 3.24. Brokers................................................14
Section 3.25. Full Disclosure........................................14
<PAGE>
Article IV - Representations and Warranties Regarding the
Shareholder
Section 4.1. Authorization..........................................14
Section 4.2. Non-contravention......................................14
Section 4.3. No Consents............................................15
Section 4.4. Ownership of the Company's Shares............. ......15
Section 4.5. Brokers................................................15
Section 4.6. Full Disclosure........................................15
Article V - Representations and Warranties Regarding Purchaser
and CDL
Section 5.1. Organization...........................................15
Section 5.2. Authorization.................................... .....16
Section 5.3. Non-contravention......................................16
Section 5.4. No Consents............................................16
Section 5.5. Brokers................................................16
Section 5.6 SEC Documents..................................... ....16
Article VI - Covenants and Agreements
Section 6.1. Access and Information.................................16
Section 6.2. Transfer and Other Taxes...............................17
Section 6.3. Non-Competition and Confidentiality Agreement. .......17
Section 6.4. Guarantees.............................................18
Section 6.5. Operations of the Company in Cary, North Carolina......18
Section 6.6. Audited Financial Statements; SEC Disclosure...........19
Section 6.7. Certain Reporting Requirements.........................19
Section 6.8. Conduct of Business....................................19
Section 6.9. Best Efforts; Further Assurances.......................19
Section 6.10. Reservation of Underlying Shares.......................19
Article VII - Closing Deliveries
Section 7.1. Mutual Condition.......................................20
Section 7.2. Deliveries by the Company and the Shareholder..........20
Section 7.3. Deliveries by CDL and Purchaser........................21
Article VIII - Intentionally Omitted
Article IX - Survival of Representations and Warranties;
Indemnification
Section 9.1. Survival of Representations and Warranties.............22
Section 9.2. Indemnification........................................22
Section 9.3. Procedures for Third Party Claims......................23
Section 9.4. Procedures for Inter-Party Claims.................. ...23
Section 9.5. Right of Set-Off.......................................24
Section 9.6. Limits on Indemnification..............................24
Article X - Miscellaneous
Section 10.1. Notices................................................24
Section 10.2. Expenses...............................................25
Section 10.3. Governing Law; Consent to Jurisdiction.................25
Section 10.4. Assignment; Successors and Assigns; No Third Party
Rights..............................................26
Section 10.5. Counterparts...........................................26
Section 10.6. Titles and Headings; Schedules.........................26
Section 10.7. Entire Agreement.......................................26
Section 10.8. Amendment and Modification........................ ....26
Section 10.9. Public Announcement....................................26
Section 10.10. Waiver..................................................26
Section 10.11. Severability............................................27
Section 10.12. No Strict Construction..................................27
Schedules
Schedule 3.1 Foreign Qualifications of the Company
Schedule 3.4 Consents
Schedule 3.6 Encumbrances
Schedule 3.7 Leased Real Property
Schedule 3.9 Certain Developments
Schedule 3.11 Litigation
Schedule 3.13 Tax Contests
Schedule 3.14 Insurance
Schedule 3.15 Environmental Matters
Schedule 3.16 Employee Matters
Schedule 3.17 Employee Benefit Plans
Schedule 3.18 Proprietary Rights
Schedule 3.19 Accounts Receivable
Schedule 3.20 Contracts
Schedule 3.21 Customers and Suppliers
Schedule 6.4 Personal Guarantees
Exhibits
Exhibit A Form of Five Year Note
Exhibit B Form of One Year Note
Exhibit C Form of Employment Agreement
Exhibit D Form of Opinion of Counsel to the Company and the
Shareholder
Exhibit E Form of Opinion of Counsel to Purchaser and CDL
<PAGE>
Exhibit 10.2
This Note has been, and any shares issued upon conversion
pursuant to the terms hereof ("Underlying Shares") will be,
acquired for investment and not with a view to, or for sale in
connection with, any distribution thereof within the meaning
of the Securities Act of 1933, as amended ("Act"). This Note,
and any securities issued upon conversion pursuant to this
Note, have not been registered under the Securities Act of
1933, or any state securities law, and may be offered and sold
only if registered pursuant to the provisions of that Act or
those laws or if an exemption from registration is available.
Notwithstanding any other provisions contained herein, no
transfer of this security, the Underlying Shares, or of any
interest in either thereof shall be made unless the conditions
specified in Article Four hereof have been fulfilled.
TRANSFER IS ALSO RESTRICTED BY SECTION 6.04.
7% SUBORDINATED CONVERTIBLE NOTE DUE 2003
OF CONSOLIDATED DELIVERY & LOGISTICS, INC.
Registered Holder: David L. Chesney
August 5, 1998
Address: P.O. Box 1334 No. N-1
Cary, NC 27512
Principal Amount: $1,460,000 Clifton, New Jersey
Due: August 5, 2003
FOR VALUE RECEIVED, CONSOLIDATED DELIVERY & LOGISTICS, INC., a
Delaware corporation (hereinafter called the "Company"), hereby promises to pay
to the holder above named (herein called the "Holder"), or his registered
assign(s), the principal sum above stated on August 5, 2003 and to pay interest
thereon at the rate of seven percent (7%) per annum from the date hereof.
Interest shall be computed on the balance of principal outstanding from time to
time, and payable quarterly, beginning on October 1, 1998.
Both principal hereof and interest thereon are payable in
lawful money of the United States of America at the Holder's address above or
such other address as the Holder shall designate in writing delivered to the
Company from time to time. Prior to any sale or other disposition of this Note,
the Holder will endorse hereon the amount of principal paid hereon and the last
date to which interest has been paid hereon.
PREPAYMENT
The Company may prepay this debt, in whole or in part, without
premium or penalty at any time on and after the "Trigger Date" (as defined
below) and from time to time thereafter in its discretion; provided that it
gives the Holder ten (10) days advance written notice of its intent to prepay;
during which period the Holder may exercise its conversion rights.
ARTICLE ONE
SUBORDINATION
Anything contained herein to the contrary notwithstanding, the
indebtedness evidenced by this Note shall be fully subordinate and junior in
right of payment, to the extent and in the manner hereinafter set forth, to all
Senior Debt of the Company, including, without limitation, all indebtedness due
to any bank, trust company, or similar financial institution (hereinafter a
"bank"), direct or indirect, absolute or contingent, due or to become due,
whether now outstanding or hereafter created, and any and all renewals of the
foregoing by operation of law or otherwise. (Such indebtedness of the Company to
which the indebtedness evidenced by this Note and the interest thereon is
subordinate and junior being sometimes hereinafter referred to as "Senior Debt"
and also includes without limitation all debt or financing from time to time
arranged by First Union Commercial Corporation or any other bank for working
capital, acquisition financing, capital improvements or the like).
(i) In the event of any insolvency or
bankruptcy proceedings, and any receivership, liquidation,
reorganization or other similar proceedings in connection
therewith, relative to the Company or to its creditors, as
such, or to its property, and in the event of any proceedings
for voluntary liquidation, dissolution or other winding up of
the Company, whether or not involving insolvency or
bankruptcy, and in the event of any execution sale, then the
holders of Senior Debt shall be entitled to receive payment in
full of all principal of, and premium on and interest on all
Senior Debt (including any such interest which may accrue
after the commencement of any such proceedings) before the
Holder of this Note is entitled to receive any further payment
on account of principal of or premium, if any, on this Note,
and to that end the holders of Senior Debt shall be entitled
to receive for application in payment thereof any payment or
distribution of any kind or character, whether in cash or
property or securities, which may be payable or deliverable in
any such proceedings in respect to this Note except with
respect to interest payments.
(ii) The Company shall not be required to
make, directly or indirectly, and the Holder shall not be
entitled to accept, receive (directly or indirectly) or
retain, any payment or prepayment of principal or premium
hereunder if and so long as a payment default under the terms
of any Senior Debt shall have occurred and shall be
continuing.
(iii) In the event that this Note is
declared due and payable before its expressed maturity because
of the occurrence of a default hereunder (under circumstances
when the provisions of clause (i) above shall not be
applicable), and within 90 days of such declaration, the
holders of the Senior Debt accelerate the indebtedness
evidenced by such Senior Debt, the holders of all Senior Debt
shall be entitled to receive payment in full of all principal
and interest on all Senior Debt (including any such interest
which may accrue after the commencement of any proceedings
referred to in clause (i) above) before the Holder of this
Note shall receive any further payment on account of the
principal of or premium, if any, on this Note.
Unless an event described in (i), (ii) or (iii) above shall
occur, principal of and accrued interest on this Note shall be payable as
provided on the first page; and in the event the payment is suspended as
provided in (i), (ii) or (iii) above, any amount previously received by the
Holder hereof prior to the effective date of such event and payable to the
Holder in accordance with the terms hereof shall be and remain the property of
the Holder, the subordination provisions being intended only to affect payments
due after an event described in (i), (ii) or (iii).
In case cash, securities or other property otherwise payable
or deliverable to the Holder of this Note shall have been applied pursuant to
the provisions of this Note to the payment of Senior Debt in full, then and in
each such case, the holder or holders of the Senior Debt at the time any
payments or distributions are received by such holder(s) of Senior Debt in
excess of the amount sufficient to pay all Senior Debt in full, (a) shall pay
over such excess to the Holder of this Note and (b) the Holder of this Note
shall be subrogated to any rights of any holder(s) of Senior Debt to receive any
further payments or distributions applicable to the Senior Debt, until this Note
shall have been paid in full. Senior Debt shall not be considered to be paid in
full unless and until all of the obligations which constitute a part of Senior
Debt have been paid in full.
In furtherance of such subordination, the Holder of this Note
hereby grants to the holder(s) of the Senior Debt irrevocable authority, after
any default in the payment of any amounts due on the Senior Debt or in any event
specified in clauses (i), (ii) or (iii) above, to demand, collect, file proofs
of claim with respect to, receive and take any and all proceedings for the
recovery of any and all monies due or to become due on account of this Note.
No present or future holder of Senior Debt shall be prejudiced
in his right to enforce subordination of this Note by any act or failure to act
on the part of the Company. The subordination provisions of this Note are solely
for the purpose of defining the relative rights of the holder(s) of Senior Debt
on the one hand and the Holder of this Note on the other hand, and nothing
herein shall impair as between the Company and the Holder of this Note, the
obligation of the Company, which is unconditional and absolute, to pay to the
Holder hereof the principal hereof and premium, if any, and interest hereon in
accordance with its terms, nor shall anything herein prevent the Holder of this
Note from declaring the Note to be due and payable before its expressed maturity
because of the occurrence of a default hereunder or, in connection therewith,
from exercising all remedies otherwise permitted by applicable law or hereunder
upon default hereunder, subject to the rights of holders of Senior Debt (as
defined herein) to cash, securities or other property otherwise payable or
deliverable to the Holder of this Note.
In furtherance of this Subordination the Holder(s) agree to
execute and deliver any and all documents requested by the Company for delivery
to its creditors (in the form as requested by such creditors) in order to
implement or verify this Subordination.
ARTICLE TWO
EVENTS OF DEFAULT
If any of the following events of default (each, an "Event of
Default") shall occur, the Holder hereof, at its option, may declare all sums of
principal and accrued interest then remaining unpaid hereon and all other
amounts payable hereunder immediately due and payable.
2.01 Events of Default
For purposes of this instrument, an Event of Default will
be deemed to have occurred if:
(a) the Company shall fail to pay any
installment of principal or interest on this Note or any other
Note issued by the Company to the Holder and such non-payment
shall continue for a period of fifteen (15) days from the date
due; or
(b) a receiver, liquidator or trustee of the
Company or of any property of the Company, shall be appointed
by court order; or the Company shall be adjudged bankrupt or
insolvent; or any of the property of the Company shall be
sequestered by court order; or a petition to reorganize the
Company under any bankruptcy, reorganization or insolvency law
shall be filed against the Company and shall not be dismissed
within 60 days after such filing; or
(c) the Company shall file a petition in
voluntary bankruptcy or requesting reorganization under any
provision of any bankruptcy, reorganization or insolvency law
or shall consent to the filing of any petition against it
under any such law; or
(d) the Company shall make a formal or
informal assignment for the benefit of its creditors or admit
in writing its inability to pay its debts generally when they
become due or shall consent to the appointment of a receiver,
trustee or liquidator of the Company or of all or any part of
the property of the Company; or
(e) the holder of any Senior Debt shall
accelerate payment of such Senior Debt following an event of
default under such Senior Debt.
2.02 Remedies on Default
If an Event of Default shall have occurred, in addition to its
rights and remedies under this Note, and any other instruments, the Holder may
at its option by written notice to the Company declare all indebtedness to
Holder hereunder to be due and payable, whereupon the same shall forthwith
mature and become due and payable together with interest accrued thereon,
without any further notice to and without presentment, demand, protest or notice
of protest, all of which are hereby waived. In addition, after an Event of
Default, interest shall be payable hereunder at the rate of nine percent (9%)
per annum.
Subject to the rights of holders of Senior Debt, the Holder
may proceed to protect and enforce its rights by suit in equity, action at law
or other appropriate proceedings, including, without limitation, action for the
specific performance of any agreement contained herein or in any other
instrument, or for an injunction against a violation of any of the terms hereof
or thereof, or in aid of the exercise of any right, power or remedy granted
hereby or by law, equity or otherwise.
ARTICLE THREE
CONVERSION PRIVILEGE/OBLIGATION
The Company hereby grants to the Holder of this Convertible
Note the right to convert this Note into fully paid and non-assessable shares of
the Company's Common Stock, $.001 par value (the "Common Stock"), at the
"Conversion Price" per share. The "Conversion Price" is defined as Six Dollars
and 00/100 ($6.00). The right to convert may be exercised by the Holder at any
time after the date hereof up to and including, July 1, 2003, except as provided
herein. The number of shares of Common Stock into which this Note may be
converted shall be determined by taking (a) the sum of (1) the principal amount
of this Note, namely $1,460,000, and (2) any interest due and unpaid from the
date of issue to the date of purchase, and dividing said sum by (b) the
Conversion Price, which Conversion Price is subject to adjustment as provided in
Section 3.06 below. The right to convert may only be exercised with respect to
(a) the entire amount due on the Note at the exercise date less $200,000 from
the date hereof through July 1, 2003 and (b) the entire amount due on the Note
at the exercise date if the exercise date is after July 1, 2003. The amount and
kind of securities purchasable pursuant to the rights granted hereby and the
purchase price for such securities are subject to adjustment as provided
hereunder. The right to convert may be exercised notwithstanding any limitation
on the Holder's ability to receive payments pursuant to Article
One-Subordination.
The Company also shall have the right to convert this Note
into fully paid and non-assessable shares of Common Stock at any time after the
Trigger Date at the Conversion Price per share, in accordance with the formula
provided above. The Company may convert all or any part of the amount due on the
Note.
For purposes of this Note, the "Trigger Date" shall mean the
first business day after the date on which the average of the closing sales
prices as reported by the National Association of Securities Dealers over a 30
consecutive trading day period (which 30 day period begins after the date
hereof) equals or exceeds the Conversion Price. "Trading day" is defined as a
day on which trades may be made on the Nasdaq National Market.
3.01 Whole Shares. Upon conversion, only whole shares shall
be issued. Any remainder due hereunder which is insufficient to purchase a whole
share of Common Stock shall be paid by the Company in cash.
3.02 Exercise Procedure.
(a) The Conversion privilege shall be deemed to have been
exercised (the "Exercise Time") when either (x) the Company shall have received
from the Holder all of the following:
(i) a properly completed Exercise
Agreement in form annexed hereto executed by the person
exercising such conversion privilege; and
(ii) this Note; and
(iii) if this Note shall not be registered
in the name of the person exercising such conversion
privilege, an assignment or assignments as described in
Section 3.04 hereof evidencing an assignment of such Note to
the person exercising the same, in which case the Holder shall
comply with Article Four hereof and submit proof, including
opinions of Holder's counsel, that the assignment and exercise
comply with all federal and state securities laws.
or (y) the Company shall have delivered to the Holder its notice of exercise in
writing. Upon receipt of such notice, the Holder shall immediately deliver this
Note to the Company. Exercise of the Company's conversion privilege shall be
effective notwithstanding any failure or delay of the Holder on delivering the
Note to the Company, and no interest shall accrue hereunder after the Company
sends Holder its notice of exercise of the conversion privilege.
(b) Certificates for the underlying shares acquired shall be
delivered to the Holder within 20 days after the Exercise Time (or the date of
delivery of the Note to the Company, if later).
(c) If the Note is converted in part prior to July 1,
2003, the Company shall so note in its records.
3.03 Exercise Agreement. The Exercise Agreement shall be in
the form set forth at the end of this Note. If the Conversion Shares are not to
be issued in the name of the persons to whom the Note is registered, such
Agreement shall also state the name of the persons to whom the certificates for
the Conversion Shares are to be issued. Such Exercise Agreement shall be dated
the actual date of execution thereof.
3.04 Assignment. The Assignment shall be in the form set forth
at the end of this Note and shall provide that the person executing the same
thereby sells, assigns and transfers to the person(s) named therein the rights
evidenced by this Note to purchase the number of the underlying shares stated
therein. Such Assignment shall be dated the actual date of execution thereof.
The Assignee shall be required to provide the Company with proof of compliance
with all applicable federal and state securities laws.
3.05 Authorization and Issuance of Conversion Shares.
The Company covenants and agrees that:
(a) The Underlying Shares issuable upon any exercise of the
conversion privilege shall be deemed to have been issued to the person
exercising such privilege at the Exercise Time, and the person exercising such
privilege shall be deemed for all purposes to have become the record holder of
such Underlying Shares at the Exercise Time.
(b) All Underlying Shares which may be issued upon any whole
or partial exercise will, upon issuance, be fully paid and non-assessable and
free from all taxes, liens and charges with respect to the issue thereof.
(c) The Company will take all such action as may be necessary
and reasonably within its powers to assure that all underlying shares issuable
upon exercise may be issued without violation of any applicable law or
regulation. The Company will not take any action which would result in any
adjustment of the Conversion Price if the total number of Common Shares issuable
after such action upon exercise of the conversion privilege in full, together
with all Common Shares then outstanding and all Common Shares then issuable upon
the exercise of all outstanding options, warrants, conversion and other rights,
would exceed the total number of Common Shares then authorized by the Company's
Certificate of Incorporation.
(d) The issuance of certificates for the Underlying Shares
upon exercise of the conversion privilege shall be made without charge to the
registered Holder(s) thereof for any issuance tax in respect thereof or other
costs incurred by the Company in connection with the exercise and the related
issuance of the underlying shares.
3.06 Anti-dilution. The Conversion Price shall be adjusted, to
the nearest cent, from time to time, only to the following extent:
(a) Whenever after the date hereof the Company shall (i)
declare and pay a dividend to the holders of its shares of common stock in
shares of its common stock, or in other securities immediately convertible into
shares of common stock, (ii) split the outstanding shares of its common stock
into a greater number of outstanding shares of common stock, or (iii) combine
the outstanding shares of its common stock into a smaller number of outstanding
shares of common stock, the maximum number of shares that the Holder shall be
entitled to convert and/or purchase shall be adjusted so that the Holder of this
Note shall thereafter be entitled to receive upon conversion of the entire
initial indebtedness represented hereby that number of shares of common stock
which he would have held had the entire initial indebtedness of this Note been
converted immediately prior to the effective date of such action and had that
action been effectuated with respect to those converted shares. In any such
event the Conversion Price will be altered accordingly so that any conversion
taking place after any event described in (i), (ii), and/or (iii) above may be
accomplished at the same cost that would have obtained had the shares been
converted immediately prior to such action. For purposes of this subparagraph
(a), the effective date for any stock dividend referred to in clause (i) above
shall be deemed to be the record date fixed for the determination of the holders
of common stock entitled to receive such dividend.
(b) In the case after the date hereof of any capital
reorganization or any reclassification of the capital stock of the Company or in
case of the consolidation of the Company with or merger of the Company into
another corporation or the conveyance of all or substantially all of the
properties and assets of the Company to another corporation, adequate provision
shall be made whereby this Note shall thereafter be convertible into the number
of shares of stock or other securities or property to which a holder of the
number of shares of common stock of the Company deliverable upon conversion of
this Note immediately prior to such reorganization, reclassification,
consolidation, merger or conveyance would have been entitled upon consummation
of such reorganization, reclassification, consolidation, merger or conveyance;
and, in any such case, appropriate adjustment (as determined by the board of
directors) shall be made in the application of the provisions herein set forth
with respect to the rights and interests of the holder of this Note to the end
that such provisions (including, without limitation, the provisions with respect
to changes in and other adjustments of the Conversion Price) shall thereafter be
applicable, as nearly as reasonably may be, to the shares of stock or other
securities or property thereafter deliverable upon the conversion of this Note.
ARTICLE FOUR
RESTRICTIONS ON TRANSFER
The Holder, by acceptance hereof, acknowledges that it
understands that the Company will rely upon the representations set forth herein
in issuing the Note and the Underlying Shares, if any, without registration
under the Act, the New Jersey Uniform Securities Law, or any other state
securities law.
Accordingly, the Holder, by acceptance of the Note, represents
and warrants that this offering is being made pursuant to the exemption from
registration with the Securities and Exchange Commission ("SEC") afforded by
Sections 3(b) and/or 4(2) of the Act relating to transactions by an issuer not
involving any public offering. The Holder understands that the Company has no
present intention, and is under no obligation to, register the Note or the
Underlying Shares under the Act, or any applicable state law, except as set
forth in Article Five hereof.
The Holder understands that due to lack of registration, the
Note and the Underlying Shares will be restricted securities, that the holder
must bear the economic risk of the investment for an indefinite period, that the
Note and the Underlying Shares may not be sold, pledged or otherwise disposed of
unless they are registered under the Act and any applicable state securities
law, or an exemption from such laws is available and the Company is supplied
with an opinion of counsel to the Holder, satisfactory to the Company, that
registration is not required under any of such laws, and in the opinion of
counsel for the Company, such sale, transfer, or pledge will not cause the
Company to fail to be in compliance with the exemption provisions under which
the Note or the Underlying Shares were issued.
The Holder has such knowledge and experience in financial and
business affairs that it is capable of evaluating the merits and risks of the
prospective investment.
The Holder is able to bear the economic risk of this
investment. An investment in the Note and the Underlying Shares is suitable for
the Holder in light of its financial position and investment objectives, with
full knowledge that this investment could result in a complete loss. The Holder
recognizes that the Note represents a HIGH-RISK, SPECULATIVE INVESTMENT and that
there is no assurance that any return will be received thereon. The Holder can
afford a total loss of this investment.
The Note is being, and the Underlying Shares will be,
purchased for the Holder's own account for investment purposes and not with a
view to the resale or distribution thereof by the Holder.
The Holder understands that a restrictive legend in
substantially the following form shall be placed on the certificate(s)
representing the Underlying Shares:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933, as amended
("Act"). Such shares have been acquired for investment and may
not be publicly offered or sold in the absence of (1) an
effective registration statement for such shares under the
Act; (2) opinions of counsel to the Company and to the holder
hereof and presented to the Company prior to any proposed
transfer to the effect that registration is not required under
the Act; or (3) a letter presented to the Company, prior to
any proposed transfer, from the staff of the Securities and
Exchange Commission, to the effect that it will not take any
enforcement action if the proposed transfer is made without
registration under the Act."
Except as set forth in the Stock Purchase Agreement dated this
date (including the "SEC Documents" referred to therein), no representations or
warranties have been made to the Holder by the Company. In entering into this
transaction, the Holder is not relying upon any information, other than that set
forth in the Stock Purchase Agreement, including the SEC Documents.
ARTICLE FIVE
REGISTRATION RIGHTS
The Company agrees to file a registration statement on Form
S-3 with the Securities and Exchange Commission ("Commission") under the
Securities Act covering the shares of Common Stock into which this Note may be
converted (i.e., the Underlying Shares) within ninety (90) days after the date
hereof; and use its best efforts to cause such registration statement to become
effective as soon as possible thereafter and to remain effective until the
Underlying Shares are disposed of by the Shareholder or, if the Note is
satisfied without conversion of any part of it into Underlying Shares, until the
date of such satisfaction. The Company agrees to provide an opinion of counsel
to each broker or underwriter effecting a sale of the Underlying Shares
confirming that the sale of such Underlying Shares may be made pursuant to the
registration statement. The Company also agrees to comply, at its expense, with
any prospectus delivery requirements applicable to the sale of the Underlying
Shares pursuant to the registration statement. The Company shall not be
obligated to cause to become effective more than one registration statement with
respect to the Underlying Shares.
At any time and from time to time, the Holder agrees without
further consideration, to take such actions and to execute and deliver such
documents as may be reasonably requested by the Company in order to effectuate
the purposes of this Article Five including, without limitation, supplying
information with respect to the Holder that may be necessary or required for
inclusion in the registration statement. In the event that such information or
other material requested by the Company is not provided to the Company within a
reasonable period of time following delivery of written notice requesting such
information, then the Company's obligations under this Article Five shall be
suspended as to such Holder.
The Company will take such other actions reasonably requested
by the Holder and any underwriter it engages to affect the sale of the
Underlying Shares so as to comply with state securities laws applicable to the
sale of the Underlying Shares pursuant to the registration statement.
The Company will pay all expenses incurred in complying with
Article Five hereof, including, without limitation, all registration and filing
fees (including all expenses incident to filing with the National Association of
Securities Dealers, Inc.), reasonable fees and disbursements of counsel to the
Company, securities law and blue sky fees and expenses (except where such
payment is prohibited by law or applicable regulation). All underwriting
discounts and selling commissions applicable to the sales of the Underlying
Shares and any state or federal transfer taxes payable with respect to the sales
of the Underlying Shares and all fees and disbursements of counsel for the
Holder, if any, in each case arising in connection with registration of the
Underlying Shares under Article Five hereof, shall be payable by the Holder.
If the conversion of the Note is made pursuant to a notice
that stipulates that it is to be effected in connection with an underwritten
offering of the Underlying Shares registered pursuant to this Article, the
conversion notice (or Exercise Agreement) may be conditioned upon the closing
with the underwriter for the sale of the Underlying Securities pursuant to such
offering to the extent permitted by the SEC and applicable securities laws, in
which case the Holder shall not be deemed to have converted any portion of such
Note until immediately prior to the closing of the sale of securities upon a
firm commitment to buy.
The Company agrees to indemnify the Shareholder and hold him
harmless from any loss, claim or liability of any nature arising out of any
allegation or finding of an untrue statement of material fact contained in the
registration statement (including for the purpose of this agreement any
prospectus and all documents incorporated by reference), or of the omission of a
material fact required to be stated in the registration statement or necessary
to make the statements therein, in the light in which they were made, not
misleading. This indemnity shall not apply to any loss, claim or liability to
the extent arising from the information furnished to the Company by the
Shareholder for use in the registration statement, or any misrepresentation made
by the Shareholder for which the Company would not otherwise be required to
indemnify the Shareholder under this paragraph. The Shareholder agrees to
indemnify the Company for any loss, claim or liability of any nature arising out
of any allegation or finding of an untrue statement of material fact contained
in the registration statement which was provided to the Company by the
Shareholder in writing.
ARTICLE SIX
MISCELLANEOUS
6.01 Failure or Delay Not Waiver. No failure or delay on the
part of the Holder hereof in the exercise of any power, right, or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.
6.02 Notices. Any notice herein required or permitted to be
given shall be given by federal express or similar overnight courier or by same
day courier service or by certified mail, return receipt requested, if to the
Holder, at the address set forth on the first page hereof, or,
If to the Company:
Consolidated Delivery & Logistics, Inc., 380 Allwood Road, Clifton,
New Jersey 07012, Attn: General Counsel.
6.03 Amendments. The term "Note" or "this Note" and all
reference thereto, as used throughout this instrument, shall mean this
instrument as originally executed or, if later amended or supplemented, then, as
so amended or supplemented.
6.04 Assignability. This Note shall be binding upon the
Company, its successors and assigns, and shall inure to the benefit of Holder,
its successors and assigns. Except as expressly permitted herein, this Note may
not be transferred or assigned prior to July 2, 2003. This is the Five Year Note
issued pursuant to a Stock Purchase Agreement dated this date among the Company,
the Holder and others, the terms of which are incorporated herein, including the
rights of offset of the Company and its Silver Star Express subsidiary.
6.05 Governing Law. This Note has been executed in and
shall be governed by the laws of the State of New Jersey.
6.06 No Personal Liability. No officer, director,
shareholder, employee, consultant or agent of the Company shall be personally
liable for repayment of this Note.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed in its name by its duly authorized officer and its corporate seal to be
affixed hereto.
CONSOLIDATED DELIVERY & LOGISTICS, INC.
By: /s/ Albert W. Van Ness, Jr.
Albert W. Van Ness, Jr., Chairman
<PAGE>
Exhibit 10.3
This Note has been, and any shares issued upon conversion
pursuant to the terms hereof ("Underlying Shares") will be,
acquired for investment and not with a view to, or for sale in
connection with, any distribution thereof within the meaning
of the Securities Act of 1933, as amended ("Act"). This Note,
and any securities issued upon conversion pursuant to this
Note, have not been registered under the Securities Act of
1933, or any state securities law, and may be offered and sold
only if registered pursuant to the provisions of that Act or
those laws or if an exemption from registration is available.
Notwithstanding any other provisions contained herein, no
transfer of this security, the Underlying Shares, or of any
interest in either thereof shall be made unless the conditions
specified in Article Four hereof have been fulfilled.
TRANSFER IS ALSO RESTRICTED BY SECTION 6.04.
7% CONTINGENT SUBORDINATED CONVERTIBLE NOTE DUE 1999
OF CONSOLIDATED DELIVERY & LOGISTICS, INC.
Registered Holder: David L. Chesney
August 5, 1998
Address: P.O. Box 1334 No. CN-1
Cary, NC 27512
Principal Amount: Up to $500,000 Clifton, New Jersey
Due: November 1, 1999
FOR VALUE RECEIVED, CONSOLIDATED DELIVERY & LOGISTICS, INC., a
Delaware corporation (hereinafter called the "Company"), hereby promises to pay
to the holder above named (herein called the "Holder"), or his registered
assign(s), the principal sum above stated on November 1, 1999 and to pay
interest on the finally-determined principal amount hereof at the rate of seven
(7%) percent per annum from the date hereof. All amounts due hereunder are
subject to reduction pursuant to Section 2.3(c) of the Stock Purchase Agreement
described in Section 6.04, which provisions are incorporated herein as if set
forth in full, and Article Three below. Interest shall be computed on the
principal amount hereof, as it may be reduced from time to time, and payable
upon maturity.
Both principal hereof and interest thereon are payable in
lawful money of the United States of America at the Holder's address above or
such other address as the Holder shall designate in writing delivered to the
Company from time to time. Prior to any sale or other disposition of this Note,
the Holder will endorse hereon the amount of principal paid hereon and the last
date to which interest has been paid hereon.
PREPAYMENT
The Company may prepay this debt, in whole or in part, without
premium or penalty at any time on and after the "Testing Date" (as defined
below) and from time to time thereafter in its discretion; provided that it
gives the Holder ten (10) days advance written notice of its intent to prepay;
during which period the Holder may exercise its conversion rights.
ARTICLE ONE
SUBORDINATION
Anything contained herein to the contrary notwithstanding, the
indebtedness evidenced by this Note shall be fully subordinate and junior in
right of payment, to the extent and in the manner hereinafter set forth, to all
Senior Debt of the Company, including, without limitation, all indebtedness due
to any bank, trust company, or similar financial institution (hereinafter a
"bank"), direct or indirect, absolute or contingent, due or to become due,
whether now outstanding or hereafter created, and any and all renewals of the
foregoing by operation of law or otherwise. (Such indebtedness of the Company to
which the indebtedness evidenced by this Note and the interest thereon is
subordinate and junior being sometimes hereinafter referred to as "Senior Debt"
and also includes, without limitation all debtor or financing from time to time
arranged by First Union Commercial Corporation or any other bank for working
capital, acquisition financing, capital improvements or the like).
(i) In the event of any insolvency or
bankruptcy proceedings, and any receivership, liquidation,
reorganization or other similar proceedings in connection
therewith, relative to the Company or to its creditors, as
such, or to its property, and in the event of any proceedings
for voluntary liquidation, dissolution or other winding up of
the Company, whether or not involving insolvency or
bankruptcy, and in the event of any execution sale, then the
holders of Senior Debt shall be entitled to receive payment in
full of all principal of, and premium on and interest on all
Senior Debt (including any such interest which may accrue
after the commencement of any such proceedings) before the
Holder of this Note is entitled to receive any further payment
on account of principal of or premium, if any, on this Note,
and to that end the holders of Senior Debt shall be entitled
to receive for application in payment thereof any payment or
distribution of any kind or character, whether in cash or
property or securities, which may be payable or deliverable in
any such proceedings in respect to this Note except with
respect to interest payments.
(ii) The Company shall not be required to
make, directly or indirectly, and the Holder shall not be
entitled to accept, receive (directly or indirectly) or
retain, any payment or prepayment of principal or premium
hereunder if and so long as a payment default under the terms
of any Senior Debt shall have occurred and shall be
continuing.
(iii) In the event that this Note is
declared due and payable before its expressed maturity because
of the occurrence of a default hereunder (under circumstances
when the provisions of clause (i) above shall not be
applicable), and within 90 days of such declaration, the
holders of the Senior Debt accelerate the indebtedness
evidenced by such Senior Debt, the holders of all Senior Debt
shall be entitled to receive payment in full of all principal
and interest on all Senior Debt (including any such interest
which may accrue after the commencement of any proceedings
referred to in clause (i) above) before the Holder of this
Note shall receive any further payment on account of the
principal of or premium, if any, on this Note.
Unless an event described in (i), (ii) or (iii) above shall
occur, principal of and accrued interest on this Note shall be payable as
provided on the first page; and in the event the payment is suspended as
provided in (i), (ii) or (iii) above, any amount previously received by the
Holder hereof prior to the effective date of such event and payable to the
Holder in accordance with the terms hereof shall be and remain the property of
the Holder, the subordination provisions being intended only to affect payments
due after an event described in (i), (ii) or (iii).
In case cash, securities or other property otherwise payable
or deliverable to the Holder of this Note shall have been applied pursuant to
the provisions of this Note to the payment of Senior Debt in full, then and in
each such case, the holder or holders of the Senior Debt at the time any
payments or distributions are received by such holder(s) of Senior Debt in
excess of the amount sufficient to pay all Senior Debt in full, (a) shall pay
over such excess to the Holder of this Note and (b) the Holder of this Note
shall be subrogated to any rights of any holder(s) of Senior Debt to receive any
further payments or distributions applicable to the Senior Debt, until this Note
shall have been paid in full. Senior Debt shall not be considered to be paid in
full unless and until all of the obligations which constitute a part of Senior
Debt have been paid in full.
In furtherance of such subordination, the Holder of this Note
hereby grants to the holder(s) of the Senior Debt irrevocable authority, after
any default in the payment of any amounts due on the Senior Debt or in any event
specified in clauses (i), (ii) or (iii) above, to demand, collect, file proofs
of claim with respect to, receive and take any and all proceedings for the
recovery of any and all monies due or to become due on account of this Note.
No present or future holder of Senior Debt shall be prejudiced
in his right to enforce subordination of this Note by any act or failure to act
on the part of the Company. The subordination provisions of this Note are solely
for the purpose of defining the relative rights of the holder(s) of Senior Debt
on the one hand and the Holder of this Note on the other hand, and nothing
herein shall impair as between the Company and the Holder of this Note, the
obligation of the Company, which is unconditional and absolute, to pay to the
Holder hereof the principal hereof and premium, if any, and interest hereon in
accordance with its terms, nor shall anything herein prevent the Holder of this
Note from declaring the Note to be due and payable before its expressed maturity
because of the occurrence of a default hereunder or, in connection therewith,
from exercising all remedies otherwise permitted by applicable law or hereunder
upon default hereunder, subject to the rights of holders of Senior Debt (as
defined herein) to cash, securities or other property otherwise payable or
deliverable to the Holder of this Note.
In furtherance of this Subordination the Holder(s) agree to
execute and deliver any and all documents requested by the Company for delivery
to its creditors (in the form as requested by such creditors) in order to
implement or verify this Subordination.
ARTICLE TWO
EVENTS OF DEFAULT
If any of the following events of default (each, an "Event of
Default") shall occur, the Holder hereof, at its option, may declare all sums of
principal and accrued interest then remaining unpaid hereon and all other
amounts payable hereunder immediately due and payable.
2.01 Events of Default
For purposes of this instrument, an Event of Default will
be deemed to have occurred if:
(a) the Company shall fail to pay any
installment of principal or interest on this Note or on any
other Note issued by the Company to the Holder and such
non-payment shall continue for a period of fifteen (15) days
from the date due; or
(b) a receiver, liquidator or trustee of the
Company or of any property of the Company, shall be appointed
by court order; or the Company shall be adjudged bankrupt or
insolvent; or any of the property of the Company shall be
sequestered by court order; or a petition to reorganize the
Company under any bankruptcy, reorganization or insolvency law
shall be filed against the Company and shall not be dismissed
within 60 days after such filing; or
(c) the Company shall file a petition in
voluntary bankruptcy or requesting reorganization under any
provision of any bankruptcy, reorganization or insolvency law
or shall consent to the filing of any petition against it
under any such law; or
(d) the Company shall make a formal or
informal assignment for the benefit of its creditors or admit
in writing its inability to pay its debts generally when they
become due or shall consent to the appointment of a receiver,
trustee or liquidator of the Company or of all or any part of
the property of the Company; or
(e) the holder of any Senior Debt shall
accelerate payment of such Senior Debt following an event of
default under such Senior Debt.
2.02 Remedies on Default
If an Event of Default shall have occurred, in addition to its
rights and remedies under this Note, and any other instruments, the Holder may
at its option by written notice to the Company declare all indebtedness to
Holder hereunder to be due and payable together with interest accrued thereon,
whereupon the same shall forthwith mature and become due and payable, without
any further notice to and without presentment, demand, protest or notice of
protest, all of which are hereby waived. In addition, after an Event of Default,
interest shall accrue on the amounts due hereunder at a rate of nine percent
(9%) per annum.
Subject to the rights of holders of Senior Debt, the Holder
may proceed to protect and enforce its rights by suit in equity, action at law
or other appropriate proceedings, including, without limitation, action for the
specific performance of any agreement contained herein or in any other
instrument, or for an injunction against a violation of any of the terms hereof
or thereof, or in aid of the exercise of any right, power or remedy granted
hereby or by law, equity or otherwise.
ARTICLE THREE
FORGIVENESS/
CONVERSION PRIVILEGE/OBLIGATION
A. Forgiveness or Reduction. On or before the date forty-five
(45) days after the end of the one-year period ending July 31, 1999 (the
"Measurement Period"), CDL shall determine: (A) the net earnings before interest
and taxes, computed in accordance with generally accepted accounting principles
consistently applied ("EBIT") of KBD Services, Inc., its subsidiary ("KBD") for
the Measurement Period. If (x) the EBIT of KBD for the Measurement Period ("KBD
EBIT") does not exceed $200,000, then this Contingent Convertible Note shall be
forgiven, the principal amount automatically reduced to zero as of the date of
issuance of this Note, and this Note shall be discharged in full and canceled.
If the KBD EBIT exceeds $200,000 but does not equal or exceed
$700,000 (the "Benchmark") for the Measurement Period, then the principal amount
of this Note shall be reduced by an amount equal to $700,000 less the KBD EBIT
for the Measurement Period. By way of example, if the KBD EBIT is $500,000 for
the Measurement Period, then the principal amount of this Note shall be reduced
by $200,000, to a $300,000 principal amount.
CDL shall cause the books and records of KBD to be maintained
as a separate profit center during the Measurement Period, so that the reduction
amount, if any, can be determined. All determinations by CDL's independent
public accountants hereunder shall be final and binding absent manifest error.
B. Conversion. The Company hereby grants to the Holder of this
Contingent Convertible Note the right to convert this Note into fully paid and
non-assessable shares of the Company's Common Stock, $.001 par value (the
"Common Stock"), at the "Conversion Price" per share, subject to the following
paragraphs. The "Conversion Price" is defined as Six Dollars and 00/100 ($6.00).
The right to convert may be exercised by the Holder at any
time after September 16, 1999 (the "Testing Date") up to and including, October
20, 1999, except as provided herein. The number of shares of Common Stock into
which this Note may be converted shall be determined by taking (a) the sum of
(1) the principal amount of this Note, as adjusted, and (2) any interest due and
unpaid from the date of issue to the date of conversion, and dividing said sum
by (b) the Conversion Price. The right to convert may only be exercised with
respect to the entire amount due on the Note (as it may have been reduced
pursuant to Article III(A) above) at the exercise date. The amount and kind of
securities purchasable pursuant to the rights granted hereby and the purchase
price for such securities are subject to adjustment as provided hereunder. The
right to convert may be exercised notwithstanding any limitation on the Holder's
ability to receive payments pursuant to Article One-Subordination.
The Company also shall have the right to convert this Note
into fully paid and non-assessable shares of Common Stock at any time after the
later of the Trigger Date and the Testing Date, at the Conversion Price per
share, in accordance with the formula provided above. The Company also may only
convert with respect to the entire amount set forth above.
For purposes of this Note, the "Trigger Date" shall mean the
first business day after the date on which the average of the closing sales
prices as reported by the National Association of Securities Dealers over a 30
consecutive trading day period (which 30 day period begins after the date
hereof) equals or exceeds the Conversion Price. "Trading day" is defined as a
day on which trades may be made on the Nasdaq National Market. All capitalized
terms used but not defined herein shall have the meanings set forth in the Stock
Purchase Agreement.
3.01 Whole Shares. Upon conversion, only whole shares shall
be issued. Any remainder due hereunder which is insufficient to purchase a whole
share of Common Stock shall be paid by the Company in cash.
3.02 Exercise Procedure.
(a) The Conversion privilege shall be deemed to have been
exercised (the "Exercise Time") when either (x) the Company shall have received
from the Holder all of the following:
(i) a properly completed Exercise
Agreement in form annexed hereto executed by the person
exercising such conversion privilege; and
(ii) this Note; and
(iii) if this Note shall not be registered
in the name of the person exercising such conversion
privilege, an assignment or assignments as described in
Section 3.04 hereof evidencing an assignment of such Note to
the person exercising the same, in which case the Holder shall
comply with Article Four hereof and submit proof, including
opinions of Holder's counsel, that the assignment and exercise
comply with all federal and state securities laws.
or (y) the Company shall have delivered to the Holder its notice of exercise in
writing. Upon receipt of such notice, the Holder shall immediately deliver this
Note to the Company. Exercise of the Company's conversion privilege shall be
effective notwithstanding any failure or delay of the Holder on delivering the
Note to the Company, and no interest shall accrue hereunder after the Company
sends Holder its notice of exercise of the conversion privilege.
(b) Certificates for the underlying shares acquired shall be
delivered to the Holder within 20 days after the Exercise Time (or the date of
delivery of the Note to the Company, if later).
3.03 Exercise Agreement. The Exercise Agreement shall be in
the form set forth at the end of this Note. If the Conversion Shares are not to
be issued in the name of the persons to whom the Note is registered, such
Agreement shall also state the name of the persons to whom the certificates for
the Conversion Shares are to be issued. Such Exercise Agreement shall be dated
the actual date of execution thereof.
3.04 Assignment. The Assignment shall be in the form set forth
at the end of this Note and shall provide that the person executing the same
thereby sells, assigns and transfers to the person(s) named therein the rights
evidenced by this Note to purchase the number of the underlying shares stated
therein. Such Assignment shall be dated the actual date of execution thereof.
The Assignee shall be required to provide the Company with proof of compliance
with all applicable federal and state securities laws.
3.05 Authorization and Issuance of Conversion Shares.
The Company covenants and agrees that:
(a) The Underlying Shares issuable upon any exercise of the
conversion privilege shall be deemed to have been issued to the person
exercising such privilege at the Exercise Time, and the person exercising such
privilege shall be deemed for all purposes to have become the record holder of
such Underlying Shares at the Exercise Time.
(b) All Underlying Shares which may be issued upon any whole
or partial exercise will, upon issuance, be fully paid and non-assessable and
free from all taxes, liens and charges with respect to the issue thereof.
(c) The Company will take all such action as may be necessary
and reasonably within its powers to assure that all underlying shares issuable
upon exercise may be issued without violation of any applicable law or
regulation. The Company will not take any action which would result in any
adjustment of the Conversion Price if the total number of Common Shares issuable
after such action upon exercise of the conversion privilege in full, together
with all Common Shares then outstanding and all Common Shares then issuable upon
the exercise of all outstanding options, warrants, conversion and other rights,
would exceed the total number of Common Shares then authorized by the Company's
Certificate of Incorporation.
(d) The issuance of certificates for the Underlying Shares
upon exercise of the conversion privilege shall be made without charge to the
registered Holder(s) thereof for any issuance tax in respect thereof or other
costs incurred by the Company in connection with the exercise and the related
issuance of the underlying shares.
3.06 Anti-dilution. The Conversion Price shall be adjusted, to
the nearest cent, from time to time, only to the following extent:
(a) Whenever after the date hereof the Company shall (i)
declare and pay a dividend to the holders of its shares of common stock in
shares of its common stock, or in other securities immediately convertible into
shares of common stock, (ii) split the outstanding shares of its common stock
into a greater number of outstanding shares of common stock, or (iii) combine
the outstanding shares of its common stock into a smaller number of outstanding
shares of common stock, the maximum number of shares that the Holder shall be
entitled to convert and/or purchase shall be adjusted so that the Holder of this
Note shall thereafter be entitled to receive upon conversion of the entire
initial indebtedness represented hereby that number of shares of common stock
which he would have held had the entire initial indebtedness of this Note been
converted immediately prior to the effective date of such action and had that
action been effectuated with respect to those converted shares. In any such
event the Conversion Price will be altered accordingly so that any conversion
taking place after any event described in (i), (ii), and/or (iii) above may be
accomplished at the same cost that would have obtained had the shares been
converted immediately prior to such action. For purposes of this subparagraph
(a), the effective date for any stock dividend referred to in clause (i) above
shall be deemed to be the record date fixed for the determination of the holders
of common stock entitled to receive such dividend.
(b) In the case after the date hereof of any capital
reorganization or any reclassification of the capital stock of the Company or in
case of the consolidation of the Company with or merger of the Company into
another corporation or the conveyance of all or substantially all of the
properties and assets of the Company to another corporation, adequate provision
shall be made whereby this Note shall thereafter be convertible into the number
of shares of stock or other securities or property to which a holder of the
number of shares of common stock of the Company deliverable upon conversion of
this Note immediately prior to such reorganization, reclassification,
consolidation, merger or conveyance would have been entitled upon consummation
of such reorganization, reclassification, consolidation, merger or conveyance;
and, in any such case, appropriate adjustment (as determined by the board of
directors) shall be made in the application of the provisions herein set forth
with respect to the rights and interests of the holder of this Note to the end
that such provisions (including, without limitation, the provisions with respect
to changes in and other adjustments of the Conversion Price) shall thereafter be
applicable, as nearly as reasonably may be, to the shares of stock or other
securities or property thereafter deliverable upon the conversion of this Note.
ARTICLE FOUR
RESTRICTIONS ON TRANSFER
The Holder, by acceptance hereof, acknowledges that it
understands that the Company will rely upon the representations set forth herein
in issuing the Note and the Underlying Shares, if any, without registration
under the Act, the New Jersey Uniform Securities Law, or any other state
securities law.
Accordingly, the Holder, by acceptance of the Note, represents
and warrants that this offering is being made pursuant to the exemption from
registration with the Securities and Exchange Commission ("SEC") afforded by
Sections 3(b) and/or 4(2) of the Act relating to transactions by an issuer not
involving any public offering. The Holder understands that the Company has no
present intention, and is under no obligation to, register the Note or the
Underlying Shares under the Act, or any applicable state law, except as set
forth in Article Five hereof.
The Holder understands that due to lack of registration, the
Note and the Underlying Shares will be restricted securities, that the holder
must bear the economic risk of the investment for an indefinite period, that the
Note and the Underlying Shares may not be sold, pledged or otherwise disposed of
unless they are registered under the Act and any applicable state securities
law, or an exemption from such laws is available and the Company is supplied
with an opinion of counsel to the Holder, satisfactory to the Company, that
registration is not required under any of such laws, and in the opinion of
counsel for the Company, such sale, transfer, or pledge will not cause the
Company to fail to be in compliance with the exemption provisions under which
the Note or the Underlying Shares were issued.
The Holder has such knowledge and experience in financial and
business affairs that it is capable of evaluating the merits and risks of the
prospective investment.
The Holder is able to bear the economic risk of this
investment. An investment in the Note and the Underlying Shares is suitable for
the Holder in light of its financial position and investment objectives, with
full knowledge that this investment could result in a complete loss. The Holder
recognizes that the Note represents a HIGH-RISK, SPECULATIVE INVESTMENT and that
there is no assurance that any return will be received thereon. The Holder can
afford a total loss of this investment.
The Note is being, and the Underlying Shares will be,
purchased for the Holder's own account for investment purposes and not with a
view to the resale or distribution thereof by the Holder.
The Holder understands that a restrictive legend in
substantially the following form shall be placed on the certificate(s)
representing the Underlying Shares:
"The shares represented by this certificate have not
been registered under the Securities Act of 1933, as amended
("Act"). Such shares have been acquired for investment and may
not be publicly offered or sold in the absence of (1) an
effective registration statement for such shares under the
Act; (2) opinions of counsel to the Company and to the holder
hereof and presented to the Company prior to any proposed
transfer to the effect that registration is not required under
the Act; or (3) a letter presented to the Company, prior to
any proposed transfer, from the staff of the Securities and
Exchange Commission, to the effect that it will not take any
enforcement action if the proposed transfer is made without
registration under the Act."
Except as set forth in the Stock Purchase Agreement dated this
date (including the "SEC Documents" referred to therein), no representations or
warranties have been made to the Holder by the Company. In entering into this
transaction, the Holder is not relying upon any information, other than that set
forth in the Stock Purchase Agreement, including the SEC Documents.
ARTICLE FIVE
REGISTRATION RIGHTS
The Company agrees to file a registration statement on Form
S-3 with the Securities and Exchange Commission ("Commission") under the
Securities Act covering the shares of Common Stock into which this Note may be
converted (i.e., the Underlying Shares) within ninety (90) days after the date
hereof; and use its best efforts to cause such registration statement to become
effective as soon as possible thereafter and to remain effective until the
Underlying Shares are disposed of by the Shareholder or, if the Note is
satisfied without conversion of any part of it into Underlying Shares, until the
date of such satisfaction. The Company agrees to provide an opinion of counsel
to each broker or underwriter effecting a sale of the Underlying Shares
confirming that the sale of such Underlying Shares may be made pursuant to the
registration statement. The Company also agrees to comply, at its expense, with
any prospectus delivery requirements applicable to the sale of the Underlying
Shares pursuant to the registration statement. The Company shall not be
obligated to cause to become effective more than one registration statement with
respect to the Underlying Shares.
At any time and from time to time, the Holder agrees without
further consideration, to take such actions and to execute and deliver such
documents as may be reasonably requested by the Company in order to effectuate
the purposes of this Article Five including, without limitation, supplying
information with respect to the Holder that may be necessary or required for
inclusion in the registration statement. In the event that such information or
other material requested by the Company is not provided to the Company within a
reasonable period of time following delivery of written notice requesting such
information, then the Company's obligations under this Article Five shall be
suspended as to such Holder.
The Company will take such other actions reasonably requested
by the Holder and any underwriter it engages to affect the sale of the
Underlying Shares so as to comply with state securities laws applicable to the
sale of the Underlying Shares pursuant to the registration statement.
The Company will pay all expenses incurred in complying with
Article Five hereof, including, without limitation, all registration and filing
fees (including all expenses incident to filing with the National Association of
Securities Dealers, Inc.), reasonable fees and disbursements of counsel to the
Company, securities law and blue sky fees and expenses (except where such
payment is prohibited by law or applicable regulation). All underwriting
discounts and selling commissions applicable to the sales of the Underlying
Shares and any state or federal transfer taxes payable with respect to the sales
of the Underlying Shares and all fees and disbursements of counsel for the
Holder, if any, in each case arising in connection with registration of the
Underlying Shares under Article Five hereof, shall be payable by the Holder.
If the conversion of the Note is made pursuant to a notice
that stipulates that it is to be effected in connection with an underwritten
offering of the Underlying Shares registered pursuant to this Article, the
conversion notice (or Exercise Agreement) may be conditioned upon the closing
with the underwriter for the sale of the Underlying Securities pursuant to such
offering to the extent permitted by the SEC and applicable securities laws, in
which case the Holder shall not be deemed to have converted any portion of the
Note until immediately prior to the closing of the sale of securities upon a
firm commitment to buy.
The Company agrees to indemnify the Shareholder and hold him
harmless from any loss, claim or liability of any nature arising out of any
allegation or finding of an untrue statement of material fact contained in the
registration statement (including for the purpose of this agreement any
prospectus and all documents incorporated by reference), or of the omission of a
material fact required to be stated in the registration statement or necessary
to make the statements therein, in the light in which they were made, not
misleading. This indemnity shall not apply to any loss, claim or liability to
the extent arising from the information furnished to the Company by the
Shareholder for use in the registration statement, or any misrepresentation made
by the Shareholder for which the Company would not otherwise be required to
indemnify the Shareholder under this paragraph. The Shareholder agrees to
indemnify the Company for any loss, claim or liability of any nature arising out
of any allegation or finding of an untrue statement of material fact contained
in the registration statement which was provided to the Company by the
Shareholder in writing.
ARTICLE SIX
MISCELLANEOUS
6.01 Failure or Delay Not Waiver. No failure or delay on the
part of the Holder hereof in the exercise of any power, right, or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing hereunder are cumulative to, and not exclusive of, any rights
or remedies otherwise available.
6.02 Notices. Any notice herein required or permitted to be
given shall be given by federal express or similar overnight courier or by same
day courier service or by certified mail, return receipt requested, if to the
Holder, at the address set forth on the first page hereof, or,
If to the Company:
Consolidated Delivery & Logistics, Inc., 380 Allwood Road, Clifton, New
Jersey 07012, Attn: General Counsel.
6.03 Amendments. The term "Note" or "this Note" and all
reference thereto, as used throughout this instrument, shall mean this
instrument as originally executed or, if later amended or supplemented, then, as
so amended or supplemented.
6.04 Assignability. This Note shall be binding upon the
Company, its successors and assigns, and shall inure to the benefit of Holder,
its successors and assigns. Except as expressly permitted herein, this Note may
not be transferred or assigned prior to October 21, 1999. This is the One Year
Note issued pursuant to a Stock Purchase Agreement dated this date among the
Company, the Holder and others, the terms of which are incorporated herein,
including the rights of offset of the Company and its Silver Star Express
subsidiary.
6.05 Governing Law. This Note has been executed in and
shall be governed by the laws of the State of New Jersey.
6.06 No Personal Liability. No officer, director,
shareholder, employee, consultant or agent of the Company shall be personally
liable for repayment of this Note.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed in its name by its duly authorized officer and its corporate seal to be
affixed hereto.
CONSOLIDATED DELIVERY & LOGISTICS, INC.
By: /s/ Albert W. Van Ness, Jr.
Albert W. Van Ness, Jr., Chairman
<PAGE>
Exhibit 99.1
FOR IMMEDIATE RELEASE,
CONTACT:
Desmond Towey
Mark Carlesimo, General Counsel Bernadette McLaughlin
Consolidated Delivery & Logistics, Inc. Desmond Towey & Associates
TEL (973) 471-1005 TEL (212) 888-7600
FAX (973) 471-5519 FAX (212) 888-7686
CONSOLIDATED DELIVERY & LOGISTICS, INC ACQUIRES
KBD SERVICES, INC.
* Southeast Based Courier Becomes Second Major Acquisition in the Last 30 Days*
Clifton, NJ (August 10, 1998) - Consolidated Delivery & Logistics, Inc. (NASDAQ:
CDLI) announced that it has acquired KBD Services, Inc. of Raleigh/Durham, North
Carolina. KBD Services, Inc. is a ground-based provider of time critical
delivery and scheduled courier services in the rapid growth North Carolina and
South Carolina markets with revenues in 1997 of approximately $6.6 million.
Albert W. Van Ness, Jr., Chairman of CD&L said, "We are extremely pleased to
have KBD join the CD&L family. Mr. David Chesney, who along with his wife,
Sherry, founded KBD (which is named after their three sons) 19 years ago, will
continue to lead this southeast ground courier entity under its new CD&L banner.
Dave and Sherry's son Ken will also remain along with the approximate 480 part
and full time employees. The KBD group are extremely hardworking, dedicated, and
experienced courier professionals and have created an exceptional transportation
service to an important group of businesses throughout KBD's geographical
presence. The Chesney family operates about 240 vehicles and has facilities in
Cary, Charlotte, Fayetteville and Greensboro, North Carolina as well as
Columbia, South Carolina and Augusta, Georgia."
In closing, Mr. Van Ness reiterated, "One of the Company's primary goals in 1998
and forward is to identify strategically smart acquisitions that will enable
CD&L to realize enhanced synergies in local, regional and national markets where
the company currently operates and, as important, to establish a presence in
promising new markets. KBD fits the "new market" strategic profile and we are
enthusiastic that this acquisition, combined with the previously announced
acquisition of Boston based Metro Courier, will add increased customer courier
service coverage and provide important improvements to the earnings potential of
CD&L."
Consolidated Delivery & Logistics, Inc. headquartered in Clifton, New Jersey is
a full service, same day ground and air delivery and logistics company with 60
offices in 23 states and the District of Columbia. The Company has nearly 3,000
employees and utilizes over 1,000 independent contractors in providing time
sensitive delivery services to thousands of businesses.
This press release contains certain forward-looking statements regarding future
events or the future financial performance of the Company. These forward-looking
statements include comments on the Company's future business development,
revenue growth and acquisitions. These forward-looking statements involve
certain risks and uncertainties that may cause the actual events or results to
differ materially from those indicated by such forward-looking statements.
Potential risks and uncertainties include without limitation the risk that the
Company will lack satisfactory merger or acquisition candidates and/or have an
inability to conclude acquisitions or mergers on satisfactory terms, will be
unable to obtain acquisition financing on satisfactory terms, or achieve cost
savings or additional profits contemplated by the Company's business management
strategy, or be able to profitably integrate KBD and Metro into the CD&L service
system or other risks specified in the Company's SEC filings.
