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
April 30, 1999
Date of Report (Date of earliest event reported)
CONSOLIDATED DELIVERY & LOGISTICS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-26954 22-3350958
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
380 Allwood Road, Clifton, New Jersey 07012
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (973) 471-1005
NOT APPLICABLE
(Former name or former address, if changed since last report.)
<PAGE>
ITEM 2. Acquisition or Disposition of Assets
On April 30, 1999, Consolidated Delivery & Logistics, Inc. ("CDL")
entered into and consummated an asset purchase agreement (the "Purchase
Agreement") with its subsidiary, Clayton/National Courier Systems, Inc.
("Clayton/National") and Westwind Express, Inc., Logistics Delivery Systems,
Inc., Fastrak Delivery Systems, Inc., Sierra Delivery Services, Inc., and Steven
S. Keihner (collectively, "Westwind"), whereby Clayton/National purchased
certain of the assets and liabilities of Westwind.
The purchase price was comprised of approximately $2,650,000 in cash
including estimated direct acquisition costs, $1,680,000 in various 7%
subordinated notes (the "Notes") and 149,533 shares of CDL's common stock. The
Notes are comprised of two-year notes due April 30, 2001 with a total principal
amount of $1,200,000 and three-year notes due April 30, 2002 with a total
principal amount of $480,000. Interest on the Notes is payable quarterly
commencing July 31, 1999. The Notes are subordinate to all existing or future
senior debt of CDL. In addition, a contingent earn out in the aggregate amount
of up to $700,000 is payable based on the achievement of certain financial goals
during the two year period following the closing. The earn out is payable 60% in
cash and 40% in one year promissory notes bearing interest at a rate of 7% per
annum having similar terms as the Notes referred to above. CDL financed the
acquisition using proceeds from its revolving credit facility with First Union
Commercial Corporation.
The description above of the Purchase Agreement and the Note is a
summary and does not purport to be complete. Reference should be made to the
copies of such documents filed as exhibits to this report for a complete
description of their terms.
ITEM 7. Financial Statements and Exhibits
a. Financial Statement of Business Acquired.
It is impracticable to provide the required financial statements for
Westwind 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 Westwind 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 Purchase Agreement dated April 30, 1999 by and among Consolidated
Delivery & Logistics, Inc., Clayton/National Courier Systems,
Inc., Westwind Express, Inc., Logistics Delivery Systems, Inc.,
Fastrak Delivery Systems, Inc. and Sierra Delivery Services, Inc.
and Steven S. Keihner.
10.2 Form of 7% Subordinated Notes Due April 30, 2001 and April 30,
2002.
99.1 Press Release issued May 6, 1999 regarding the acquisition.
<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: May 13, 1999 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>
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: May 13, 1999 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
EXHIBIT 10.1
Asset Purchase Agreement
Dated
As of APRIL 30, 1999
By and among
CONSOLIDATED DELIVERY & LOGISTICS, INC.,
clayton/national courier systems, inc.,
WESTWIND EXPRESS, INC.,
LOGISTICS DELIVERY SYSTEMS, INC.,
FASTRAK DELIVERY SYSTEMS, INC.
AND SIERRA DELIVERY SERVICES, INC.
AND
STEVEN S. KEIHNER
<PAGE>
TABLE OF CONTENTS
ARTICLE I - Certain Definitions............................................
Section 1.1. Certain Definitions............................................
Section 1.2. Interpretation.................................................
ARTICLE II - Purchase and Sale of Assets; Assumption of Liabilities;
Additional Covenants...........................................
Section 2.1. Purchase and Sale of Assets....................................
Section 2.2. Purchase Price............................................
Section 2.3. Payment of the Purchase Price.............................
Section 2.4. Allocation of the Purchase Price..........................
Section 2.5. Closing...................................................
ARTICLE III - Representations and Warranties of the Sellers
and the Shareholder...........................................
Section 3.1. Organization and Qualification of the Sellers.............
Section 3.2. Authorization.............................................
Section 3.3. Non-contravention.........................................
Section 3.4. No Consents...............................................
Section 3.5. The Purchased Assets......................................
Section 3.6. Personal Property.........................................
Section 3.7. Real Property.............................................
Section 3.8. Predecessor Status........................................
Section 3.9. Employment Matters; No Collective Bargaining Agreement....
Section 3.10. Financial Statements......................................
Section 3.11. Absence of Certain Developments...........................
Section 3.12. Governmental Authorizations; Licenses.....................
Section 3.13. Litigation................................................
Section 3.14. Undisclosed Liabilities...................................
Section 3.15. Taxes.....................................................
Section 3.16. Insurance.................................................
Section 3.17. Environmental Matters.....................................
Section 3.18. Proprietary Rights........................................
Section 3.19. Material Customers, Contracts and Commitments.............
Section 3.20. Accounts Receivable.......................................
Section 3.21. Books and Records.........................................
Section 3.22. Brokers...................................................
Section 3.23. Net Worth of the Seller...................................
Section 3.24. Affiliates................................................
Section 3.25 Year 2000.................................................
Section 3.26. Full Disclosure...........................................
<PAGE>
ARTICLE IV - Representations and Warranties of the Purchaser and CDL........
Section 4.1. Organization..............................................
Section 4.2. Authorization.............................................
Section 4.3. Non-contravention.........................................
Section 4.4. No Consents...............................................
Section 4.5. Brokers...................................................
Section 4.6. SEC Documents.............................................
Section 4.7 CDL Stock.................................................
Section 4.8 Independent Investigation.................................
Section 4.9 Full Disclosure...........................................
ARTICLE V - Covenants and Agreements........................................
Section 5.1. Closing Documents.........................................
Section 5.2. Taxes.....................................................
Section 5.3. Change of Name............................................
Section 5.4. Non-Competition and Confidentiality Agreement.............
Section 5.5. Best Efforts; Further Assurances..........................
Section 5.6. Employment Matters........................................
Section 5.7. Audited Financial Statements of the Sellers...............
Section 5.8. Access and Information....................................
Section 5.9. Collection of Accounts Receivable by the Purchaser........
Section 5.10 Securities Law Matters....................................
Section 5.11 Restrictions on Transfer..................................
Section 5.12 Lock Up of CDL Stock......................................
Section 5.13 Purchase of Vans..........................................
ARTICLE VI - Deliveries at Closing..........................................
Section 6.1. Deliveries by the Shareholder and the Sellers.............
Section 6.2. Deliveries by CDL and Purchaser...........................
ARTICLE VII - Survival of Representations and Warranties; Indemnification...
Section 7.1. Survival of Representations and Warranties................
Section 7.2. Indemnification...........................................
Section 7.3. Procedures for Third Party Claims.........................
Section 7.4. Procedures for Inter-Party Claims.........................
Section 7.5. Right of Set-Off..........................................
Section 7.6 Certain Limitations.......................................
<PAGE>
ARTICLE VIII - Miscellaneous................................................
Section 8.1. Notices. .................................................
Section 8.2. Expenses. ................................................
Section 8.3. Governing Law; Consent to Jurisdiction. ..................
Section 8.4. Assignment; Successors and Assigns; No Third Party Rights.
Section 8.5. Counterparts. ............................................
Section 8.6. Titles and Headings. .....................................
Section 8.7. Entire Agreement. ........................................
Section 8.8. Amendment and Modification. ..............................
Section 8.9. Public Announcement. .....................................
Section 8.10. Waiver. ..................................................
Section 8.11. Severability..............................................
Section 8.12. No Strict Construction. ..................................
Schedules
Schedule 1.1AL Assumed Liabilities
Schedule 1.1EA Excluded Assets
Schedule 1.1PA Purchased Assets
Schedule 1.1PP Prepayments
Schedule 3.1 Foreign Qualification
Schedule 3.3 Contravention of Agreements
Schedule 3.4 Consents
Schedule 3.6 Encumbrances
Schedule 3.6V Vehicles and Vehicle Liens
Schedule 3.8 Predecessor Names
Schedule 3.9 Employee List
Schedule 3.10 Financial Statements
Schedule 3.11 Certain Developments
Schedule 3.12 Authorizations
Schedule 3.13 Litigation
Schedule 3.16 Insurance Policies
Schedule 3.17 Environmental Matters
Schedule 3.18 Proprietary Rights
Schedule 3.19 Material Customers, Contracts and Commitments
Schedule 3.20 Accounts Receivable
Schedule 4.1 Good Standing Exceptions
Exhibits
Exhibit A Allocation of Purchase Price
Exhibit B Form of Notes
Exhibit C Form of Employment Agreement
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("Agreement"), dated as of April 30, 1999, by
and among CONSOLIDATED DELIVERY & LOGISTICS, INC., a Delaware corporation
("CDL"), CLAYTON/NATIONAL COURIER SYSTEMS, INC., a Missouri corporation (the
"Purchaser"), WESTWIND EXPRESS, INC. ("Westwind"), LOGISTICS DELIVERY SYSTEMS,
INC., FASTRAK DELIVERY SYSTEMS, INC. ("Fastrak") and SIERRA DELIVERY SERVICES,
INC., each a California corporation (collectively, the "Sellers"), and STEVEN S.
KEIHNER (the "Shareholder").
W I T N E S S E T H:
WHEREAS, prior to the date hereof, the Sellers have engaged in the
ground courier and small package express delivery business and related
operations (the "Business"); and
WHEREAS, the Sellers desire to sell and transfer to the Purchaser, and
the Purchaser desires to purchase and assume from the Sellers, certain assets
and scheduled liabilities relating to the Business, all as more specifically
provided herein; and
WHEREAS, the Purchaser is a wholly owned subsidiary of CDL; and
WHEREAS, the Shareholder is the sole shareholder of each of the
Sellers;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties and covenants contained herein, and
intending to be legally bound, the parties hereto hereby 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.
"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 Asset Purchase Agreement.
"Assumed Liabilities" means only the following liabilities: the
obligations of the Sellers arising after the Closing Date under those
agreements, leases and other contracts of the Sellers related to the Business
<PAGE>
which are listed on Schedule 3.19 or Schedule 1.1AL. No other liabilities are to
be assumed by the Purchaser.
"Authorizations" has the meaning ascribed to such term in Section
3.12.
"Business" has the meaning ascribed to such term in the first recital
to this Agreement.
"Business Day" means a day, other than a Saturday or Sunday, on which
commercial banks in New Jersey and California are open for the general
transaction of business.
"CDL Stock" has the meaning ascribed to such term in Section 2.3.
"Closing" has the meaning ascribed to such term in Section 2.5.
"Closing Date" has the meaning ascribed to such term in Section 2.5.
"Code" means the Internal Revenue Code of 1986, as amended.
"Customer List" has the meaning ascribed to such term in Section 3.19.
"Damages" has the meaning ascribed to such term in Section 7.2.
"Division" has the meaning ascribed to such term in Section 2.3.
"EBIT" means earnings before interest and taxes, computed in
accordance with GAAP, except that, for purposes of Section 2.3, (1) EBIT will be
reduced by CDL's corporate overhead charges, but such charge shall not exceed
the amount of expenses which the Sellers would have been expected to expend
(absent this transaction) during the relevant periods on business functions
assumed by CDL, (2) if CDL acquires any business of a courier or delivery
company unaffiliated with CDL which is incorporated into the Division after the
Closing Date, the parties agree to negotiate in good faith to adjust the EBIT
targets set forth in Section 2.3 to take into account the projected EBIT of
those acquired business during the relevant period and (3) EBIT shall not be
effected by CDL's existing operations on the West Coast, whether or not managed
by the Shareholder after the date hereof. To the extent that, on an aggregate
basis, CDL requires the Division to incur, on an aggregate basis, incremental
net expenses in connection with the Division's supervision of the operation of
CDL's West Coast operation, such incremental expenses will be deducted before
the Division's EBIT is determined. Further, if CDL were to require a change in
operations that affects the Division's expense profile positively or negatively,
the effects of that change will be eliminated in computing the Division's EBIT.
For example, if the Division were required to lease vehicles rather than
purchase vehicles after the Closing, EBIT would nonetheless be determined as if
the vehicles had been purchased. By way of example of clause (1) above, if the
only current business function of the Sellers performed by CDL after the Closing
was an accounting function, and if absent this transaction, it is projected that
<PAGE>
the Sellers would have spent $10,000 in 1999 and $11,000 in 2000 for such
accounting function, then the maximum overhead expense for which the Division's,
EBIT could be charged hereunder would be $10,000 in 1999 and $11,000 in 2000.
"Employment Agreement" has the meaning ascribed to such term in
Section 5.6.
"Encumbrances" has the meaning ascribed to such term in Section 3.3.
"Environmental Laws" means any federal, state and 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 investigation or
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 in effect. The term Environmental Law includes, without limitation, (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Water Pollution Control Act, the Clean Air Act, the Clean Water Act, the
Solid Waste Disposal Act (including the Resource Conservation and Recovery Act
of 1976 and the Hazardous and Solid Waste Amendments of 1984), the Toxic
Substances Control Act, the Insecticide, Fungicide and Rodenticide Act, the
Occupational Safety and Health Act of 1970, each as amended and as now in
effect, and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations for
injuries or damages due to or threatened as a result of the presence of,
exposure to, or ingestion of, any Regulated Substance.
"Excluded Assets" means including, without limitation, those prepaid
taxes or government fees relating to vehicles or otherwise, security and bond
deposits, prepaid insurance premiums, prepaid supplier expenses and any other
prepaid expenses listed on Schedule 1.1PP (the "Prepayments"), all cash and cash
equivalents, accounts receivable from services rendered by the Sellers prior to
the Closing Date, tax refunds, notes due to the Company from the Shareholder,
insurance policies (and the cash value thereof), and the items of personalty
listed on Schedule 1.1EA which are not necessary for operation of the Business.
"Excluded Liabilities" means any and all liabilities or obligations of
the Sellers or of the Affiliates of the Sellers, of any kind or nature, whether
or not relating to the Business or the Purchased Assets, and whether known or
unknown, absolute, accrued, contingent or otherwise, or whether due or to become
due, arising out of events or transactions or facts occurring on, prior to, or
after the Closing Date, other than specifically identified Assumed Liabilities,
but specifically including as Excluded Liabilities trade and other accounts
payable arising or existing on or prior to the Closing Date, accrued wages and
employee benefits, all tax liabilities incurred or accrued through and including
the Closing Date (excluding Transfer Taxes to be paid by Purchaser pursuant to
Section 5.2), all amounts due to the Shareholder, any Affiliate of the
<PAGE>
Shareholder or any related party, all expenses of this transaction (including
legal and accounting fees associated with the audit of the fourth quarter of
1998 of Sellers as described in Section 5.7) and all liabilities arising out of
or related to events on or prior to the Closing Date.
"Financial Statements" has the meaning ascribed to such term in
Section 3.10.
"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
7.2.
"Indemnifying Party" has the meaning ascribed to such term in Section
7.2.
"Knowledge" means the collective knowledge, without any independent
investigations, of the officers and directors of the party making the
representation.
"Material Adverse Change" means an adverse change or series of related
adverse changes involving more than $50,000 in the Business or in the financial
condition, results of operations or prospects (financial and other) of the
Seller or the Purchased Assets.
"Notes" mean collectively the Two Year Note and the Three Year Note.
"Two Year Note" means those 7% subordinated unsecured promissory notes of CDL in
the aggregate principal amount of $1,200,000 due April 30, 2001 and "Three Year
Note" means those 7% subordinated unsecured promissory notes of CDL in the
aggregate principal amount of $480,000 due April 30, 2002, each in the form
attached hereto as Exhibit B.
"Permitted Encumbrances" means purchase money security interests or
liens under capitalized leases of vehicles used in the Business, in each case
affecting only the specific vehicles purchased or leased and listed on Schedule
3.6V.
"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 the
definition of "Purchased Assets" in this Section 1.1.
"Purchase Price" has the meaning ascribed to such term in Section 2.2.
<PAGE>
"Purchased Assets" means all of the right, title and interest in and
to all assets used in the conduct of the Business, other than the Excluded
Assets, wherever located, whether tangible or intangible (including, without
limitation, goodwill). Except for Excluded Assets, the Purchased Assets include,
without limitation, the following:
(a) the Customer List;
(b) all rights of the Sellers, if any, to transact business with the
current, former or future customers on the Customer List, all contract or other
rights, if any, under franchise, license or written agency agreements, to the
extent assignable, and all rights under any executory contract, agreement or
purchase order form, or marketing contracts, transportation services agreements,
supplier and customer contracts, all of which are listed on Schedule 3.19 or
Schedule 1.1AL (and which schedules shall include all contracts with Airborne
Express and Burlington Air Express Global);
(c) the machinery and equipment (including spare parts) and business
machines, automobiles, trucks, trailers, fork-lift trucks, and other vehicles,
furniture, fixtures, office equipment, leasehold improvements, supplies, capital
improvements in process, tools and all other tangible personal property employed
in the conduct of the Business or owned by the Seller, including the vehicles
listed on Schedule 3.6V and the machinery, equipment and furniture listed on
Schedule 1.1PA;
(d) all computer hardware, software, to the extent transferable, and
operating equipment;
(e) all inventories, including, supplies and packaging and shipping
materials (the "Inventory");
(f) to the extent transferable, all authorizations, consents,
approvals, licenses, orders, permits, operating agreements, exemptions of,
filings or registrations with, any Governmental Authority, excluding any tax
refunds;
(g) all patents, patent registrations, patent applications,
trademarks, service marks, trademark and service mark registrations and
applications therefor, trade names, copyrights, copyright registrations,
copyright applications, trade names, logos, 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 used in the conduct of the Business; and
permits, licenses or other agreements to or from third parties regarding the
foregoing (the "Proprietary Rights");
(h) all telephone and facsimile numbers (including but not limited to
1-800-FASTRAK), and all email addresses and domain names, in the name of the
Sellers or used in the Business; and
<PAGE>
(i) all other assets used in the conduct of the Business, whether or
not reflected on the books and records of the Sellers, including without
limitation, the Business as a going concern, its goodwill and franchises, its
rights, if any, to insurance proceeds with respect to the Purchased Assets
listed on Schedule 3.6V or Schedule 1.1PA (or necessary to compensate CDL or the
Purchaser for any loss with respect to the Purchased Assets or the Business
which CDL or the Purchaser would otherwise suffer), its restrictive covenants
and obligations of present and former employees, agents, representatives,
independent contractors and others, all books, records, files and papers
relating to, or necessary to the conduct of, the Business, including without
limitation, operating and training manuals, computer programs (to the extent
transferable), manuals and data, catalogs, quotations, bids, sales and
promotional materials, correspondence, trade association memberships (to the
extent transferable), research and development records, prototypes and models,
lists of present and former suppliers, customer credit information, customers'
pricing information, business plans, studies and analyses, whether prepared by
the Sellers or a third party, relating to the Business, books of account,
accounting records and other records relating to the Business.
"Regulated Substances" means pollutants, contaminants, hazardous or
toxic substances, compounds or related materials or chemicals, hazardous
materials, hazardous waste, flammable explosives (including, but not limited to
radon, radioactive materials, asbestos, urea formaldehyde foam insulation and
polychlorinated biphenyls), medical waste or by-products, 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.
"SEC Documents" has the meaning ascribed to such term in Section 5.10.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller's Accountants" means Gumbiner, Savett, et al.
"Survival Period" has the meaning ascribed to such term in Section
7.1.
"Third Party Claim" has the meaning ascribed to such term in Section
7.3.
"Working Capital" means current assets less current liabilities, as
defined in GAAP.
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.
<PAGE>
ARTICLE II
Purchase and Sale of Assets; Assumption of Liabilities; Additional
Covenants
Section 2.1. Purchase and Sale of Assets. 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 2.5), the Sellers shall sell, assign, transfer, convey and deliver to
the Purchaser all of the Sellers' right, title and interest in and to the
Purchased Assets and the Purchaser shall purchase such Purchased Assets from the
Sellers and assume the Assumed Liabilities. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN THIS AGREEMENT WITH RESPECT TO THE ASSUMED LIABILITIES, THE
PURCHASER IS NOT ASSUMING, NOR SHALL IT IN ANY MANNER BECOME LIABLE FOR, ANY
LIABILITIES OR OBLIGATIONS OF ANY KIND OR NATURE WHATSOEVER OF THE SELLERS OR
THEIR AFFILIATES, INCLUDING BUT NOT LIMITED TO THE EXCLUDED LIABILITIES.
Section 2.2. Purchase Price. The aggregate purchase price (the
"Purchase Price") to be paid by the Purchaser for the Purchased Assets shall be
$4,330,000 plus 149,533 shares of CDL's Common Stock (with a value of $480,000
based on the average closing price of the CDL Stock on the American Stock
Exchange for the 30 days ended April 23, 1999) plus the amounts set forth in
Section 2.3(b). All amounts payable to the Sellers hereunder shall be paid to
them jointly and severally and allocated among them in accordance with Exhibit
A.
Section 2.3. Payment of the Purchase Price. (a) On the Closing Date,
the Purchaser shall pay the Sellers the Purchase Price by delivery of:
(i) a check or wire transfer in the sum of $2,650,000;
(ii) the Two Year Note in the principal amount of $1,200,000 and
the Three Year Note in the principal amount of $480,000; and
(iii) irrevocable instructions to CDL's transfer agent to issue
to Seller 149,533 shares of common stock of CDL, $.001 par value ("CDL Stock").
(b)(i) 1999 Earn Out. On or before June 15, 2000, CDL shall determine
the EBIT of the former business of the Sellers (the "Division") for the period
May 1, 1999 through April 30, 2000 and deliver to the Sellers a written
calculation of such EBIT and the applicable earn out payment. If such EBIT
equals or exceeds $1,000,000, CDL shall pay to the Sellers in the aggregate not
later than 5 days after such date an earn out payment equal to $350,000. If such
EBIT is less than $1,000,000 but exceeds $950,000, CDL shall pay to the Sellers
in the aggregate an earn out payment equal to $315,000. If such EBIT is $950,000
or less, no earn out shall be due.
(ii) 2000 Earn Out. On or before June 15, 2001, CDL shall
determine the EBIT of the Division for the period May 1, 2000 through April 30,
2001 and deliver to the Sellers a written calculation of such EBIT and the
applicable earn out payment. If such EBIT equals or exceeds $1,050,000, CDL
<PAGE>
shall pay to Sellers in the aggregate not later than 5 days after such date an
earn out payment equal to $350,000. If such EBIT is less than $1,050,000 but
exceeds $1,000,000, CDL shall pay to Sellers in the aggregate an earn out
payment equal to $315,000. If such EBIT is $1,000,000 or less, no earn out shall
be due.
(iii) CDL shall cause the books and records of the Division to be
maintained as a separate profit center during each earn out measurement period,
so that any amounts due as earn out payments pursuant to this Section can be
determined. The EBIT for each measurement period shall be determined in
accordance with GAAP consistently applied and consistent with CDL's regular
audited financial reports required to be provided with its SEC filings except as
set forth in the EBIT definition. For the purpose of determining EBIT for the
Division, it is understood and agreed that both CDL and the Sellers depreciate
new vehicles over 5 years and used vehicles over 3 years.
(iv) The Purchaser shall calculate each Earn Out and provide the
Sellers with the basis for its calculation. If the Sellers disagree in writing
with Purchaser's calculation within 30 days of delivery of such calculation by
Purchaser to the Sellers, and if the Purchaser and the Sellers are unable to
agree in good faith on the calculation of either earn out within 15 days of the
Sellers' delivery to Purchaser of the written objection to the earn out
calculation, then all matters in dispute shall be referred to a nationally
recognized public accounting firm upon which the Purchaser and the Sellers
mutually agree in writing (the "CPA Firm"), within 15 days thereafter. The CPA
Firm shall, acting as experts and not as arbitrators, determine all matters in
dispute and report thereon to the Purchaser and the Sellers within ten (10)
Business Days from the date such matters are referred to it, or such other
period of time (not to exceed 20 Business Days) as the CPA Firm shall determine
that it needs to render its report, and such report shall be final and binding
on the parties hereto, and the Purchaser shall deliver to the Sellers any
additional earn out payment due as determined by the CPA Firm within five days
of the date of the determination of the CPA Firm. The fees and expenses of the
CPA Firm shall be paid half by the Shareholder and half by the Purchaser. All
earn out payments shall be allocated among the Sellers or their assignees in
accordance with Exhibit A.
(v) Any amounts due pursuant to the earn out provisions shall be
paid 60% in cash and 40% in one year promissory notes bearing interest at a rate
of 7% per annum having similar terms (aside from duration) as Exhibit B.
(c) Within 30 days after the Closing Date, the Purchaser shall
reimburse the Sellers for the Prepayments listed on Schedule 1.1PP (with
Purchaser thereafter entitled to the return of all or any part of such deposits
in accordance with the terms of any agreements under which the deposits were
required).
Section 2.4. Allocation of the Purchase Price. The Purchase Price
shall be allocated among the Purchased Assets and among the Sellers as set forth
in Exhibit A hereto. The Purchaser, CDL, the Shareholder and the Sellers shall
each use such allocation in filing their respective Internal Revenue Service
Form 8594s and any other tax filings.
<PAGE>
Section 2.5. Closing. The closing of the transactions contemplated
hereby (the "Closing") shall take place by exchange of facsimile signed
documents or at the offices of CDL at 380 Allwood Road, Clifton New Jersey 07012
on April [30], 1999 at 11:00 a.m., effective as of 11:59 p.m. on that date, or
at such other time and date thereafter as the Purchaser, CDL, the Sellers and
the Shareholder may mutually agree, which date and time shall be referred to as
the "Closing Date".
ARTICLE III
Representations and Warranties of the Sellers and the Shareholder
The Sellers and the Shareholder jointly and severally represent and
warrant to the Purchaser and CDL as follows:
Section 3.1. Organization and Qualification of the Sellers. Each
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of California, with full corporate power and
authority to own or lease its property and assets and to carry on the Business
as presently conducted, and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which such Seller is
currently conducting the Business or where the failure to be so qualified and in
good standing would not reasonably be expected to result in a Material Adverse
Change. Each state in which each Seller conducts the Business is listed on
Schedule 3.1. The Shareholder is the sole shareholder of each Seller. No Seller
has any subsidiary corporations.
Section 3.2. Authorization. (a) Each Seller has full corporate power
and authority, to execute and deliver this Agreement, the instruments of
transfer and other documents related thereto and to perform its obligations
hereunder and thereunder, all of which have been duly authorized by all
requisite corporate action. Each of this Agreement and each such instrument of
transfer has been or, at the time of delivery and execution will be, duly
authorized, executed and delivered by the Sellers constitutes or, at the time of
delivery will constitute, a valid and binding agreement of the Sellers,
enforceable against the Sellers in accordance with its terms.
(b) The Shareholder has the capacity to execute and deliver this
Agreement and the other documents to be delivered by the Shareholder pursuant to
this Agreement and to perform his respective obligations hereunder and
thereunder. The Shareholder is not under any impairment or other disability,
legal, physical, mental or otherwise, that would preclude or limit the ability
of the Shareholder to perform his obligations hereunder or thereunder. This
Agreement and each instrument of transfer to be delivered in connection herewith
constitutes or, at the time of delivery and execution will constitute, a valid
and binding agreement of the Shareholder enforceable against the Shareholder in
accordance with its terms.
Section 3.3. Non-contravention. Except as otherwise set forth in
Schedule 3.3, neither the execution and delivery of this Agreement or the
instruments of transfer nor the performance by the Sellers and the Shareholder
of their respective obligations hereunder and thereunder will (i) contravene any
<PAGE>
provision contained in the Sellers' Articles of Incorporation or By-laws, true
copies of which previously have been delivered to the Purchaser and CDL, (ii)
violate or result in a breach (with or without the lapse of time, the giving of
notice or both) of or constitute a default under (A) any contract, agreement,
commitment, indenture, mortgage, lease, pledge, note, license, permit or other
instrument or obligation or (B) any judgment, order, decree, law, rule or
regulation or other restriction of any Governmental Authority, in each case to
which the Seller or the Shareholder is a party or by which either is bound or to
which any of their respective assets or properties are subject, (iii) result in
the creation or imposition of any lien, claim, charge, mortgage, pledge,
security interest, equity, restriction or other encumbrance (collectively,
"Encumbrances") on any of the Sellers' assets or properties, or (iv) result in
the acceleration of, or permit any Person to accelerate or declare due and
payable prior to its stated maturity, any liability of Sellers.
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 Seller or the Shareholder and the
assignment of the benefits of any material agreements of the Seller to the
Purchaser.
Section 3.5. The Purchased Assets. The Purchased Assets constitute all
of the rights, properties and assets which are necessary for the conduct of the
Business. No third party (including any Affiliate) owns or has any interest by
lease, license or otherwise in any of the Purchased Assets.
Section 3.6. Personal Property. Except as otherwise set forth in
Schedule 3.6, the Sellers have good and marketable title to (or valid leasehold
or contractual interests in) all personal property comprising the Purchased
Assets, free and clear of any Encumbrances, except for Encumbrances listed on
Schedules 3.6V and 1.1AL. Schedule 3.6V lists each vehicle being transferred and
loan or financing agreements applicable to any such vehicles. All machinery,
equipment, furniture, fixtures and other personal property used in the Business
and included in the Purchased Assets are in good operating condition and fit for
operation in the ordinary course of business (subject to normal wear and tear)
with no defects that could reasonably cause a Material Adverse Change in the
aggregate. The Sellers represent that none of them do business as Military Bus
Express, Inc. and that none of the Purchased Assets are subject to any of the
following Encumbrances: (a) UCC-1 financing statement No. 9621360571 filed with
the State of California on July 29, 1996; (b) UCC-1 financing statement No.
9733960806 filed with the State of California on December 1, 1997; (c) UCC-1
financing statement No. 9804861086 filed with the State of California on
February 9, 1998; and (d) California state tax lien UCC-1 financing statement
No. 9823261045 filed on August 18, 1998.
Section 3.7. Real Property. The Sellers do not own any real property
or real estate. The Seller has previously delivered to the Purchaser and CDL
true and complete copies of its real property leases for its Business premises
located at 3709 Old Conejo Road, Newbury Park, California and 41770 Twelfth
Street West, Palmdale, California (the "Leased Real Property") which are its
<PAGE>
only leased real estate. The Sellers are not in default of any of their material
obligations under such leases. To the Knowledge of the Sellers, the landlords
under such leases also are not in default of any material obligations under such
leases. The Sellers have received any and all consents necessary to assign such
leases to the Purchaser and have given all required notifications. The Sellers
collectively have valid leasehold interests in the Leased Real Property, free
and clear of all Encumbrances. To Sellers' Knowledge, all plants, structures and
buildings leased by the Sellers are in good operating condition and fit for
operation in the ordinary course of business (subject to normal wear and tear).
Section 3.8. Predecessor Status. Set forth in Schedule 3.8 is a
listing of all names of all predecessor companies of the Sellers, including the
names of any entities from whom within the last five years the Sellers
previously acquired significant assets. The Sellers have never been a subsidiary
or division of another corporation or a part of any acquisition which was later
rescinded. Set forth on Schedule 3.8 is a listing of each business name used by
the Sellers and its predecessors and by any companies acquired by or merged into
it, and each state and county in which any such trade name is registered, if
any.
Section 3.9. Employment Matters; No Collective Bargaining Agreement.
(a) The Sellers have no employee benefit plans of any kind or nature (including
but not limited to plans under ERISA) except for those listed in Schedule 3.9.
The Purchaser and CDL shall have no obligation under or related to any such plan
to any employee of the Seller hired by the Purchaser. There are no employment or
compensation agreements with any employees of the Sellers which require
extraordinary payments other than salary and benefits consistent with past
practices. All employees of the Sellers are employees-at-will. All vacation pay
accrued before April 30, 1998 and other employee benefits due to the Sellers'
employees have been paid in full.
(b) No employees of the Sellers have been, or are currently
represented by, any labor union or covered by any collective bargaining
agreement nor, to the best of the Shareholder's or the Sellers' knowledge, is
any organization campaign to establish such representation in progress. There is
no pending or, to the Shareholder's or the Sellers' knowledge, threatened labor
dispute involving the Sellers, the Sellers have not experienced any labor
interruption, strike, slowdown, picketing, work stoppage or other labor dispute
over the past three years, nor has any application or complaint about any of the
Sellers been filed by an employee or any union with the National Labor Relations
Board or any comparable state or local agency since inception. No Seller is
bound by nor subject to (and none of their assets or properties are bound by or
subject to) any arrangement with any labor union.
(c) Schedule 3.9 contains a true and complete list of the employees
currently employed by each Seller, indicating the title or position of each and
the current compensation payable by each Seller to each employee.
Section 3.10. Financial Statements. Set forth on Schedule 3.10 are (i)
a true and complete copy of the Sellers' audited balance sheets as of December
31, 1997 and September 30, 1998 and the related audited statements of earnings
and cash flows for the periods then ended, with notes thereto, audited by the
Sellers' Accountants, and (ii) a true and complete copy of the Sellers'
unaudited balance sheet as of December 31, 1998 and March 31, 1999 and the
related unaudited statements of earnings and cash flows for the respective three
(3) month periods then ended, certified by the Sellers' chief financial officer
<PAGE>
(collectively, the "Financial Statements"). The audited Financial Statements
have been prepared in conformity with GAAP, applied on a consistent basis
throughout the respective periods and all Financial Statements present fairly
the financial condition and results of operations of the Sellers as of and for
the periods included therein.
Section 3.11. Absence of Certain Developments. Except as contemplated
by this Agreement and as set forth in Schedule 3.11, since December 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 3.11, since December 31, 1998, the Sellers have
conducted the Business in the ordinary and usual course consistent with past
practices, have used their commercially reasonable best efforts to preserve and
protect its assets and to preserve their existing business and organization and
their relations with its employees, customers, suppliers and others with whom
they have a business relationship and have not (i) sold, leased, transferred or
otherwise disposed of any of the material assets of the Business to any Person,
including, without limitation, the Shareholder (other than dispositions in the
ordinary course of business consistent with past practices), (ii) breached,
terminated or amended in any material respect any contract or lease to which any
Seller is a party or to which any of them is bound or to which their properties
are subject, (iii) suffered any material loss, damage or destruction whether or
not covered by insurance, (iv) made any change in the accounting methods or
practices they follow, whether for general financial or tax purposes, (v)
incurred any liabilities (other than in the ordinary course of business) none of
which individually or in the aggregate, are material, (vi) incurred, created or
suffered to exist any Encumbrances on the Purchased Assets, (vii) made any plan,
agreement or arrangement granting any preferential rights to purchase or acquire
any of the Purchased Assets or requiring consent of any party to the transfer of
the Purchased Assets or assignment of the accounts to be assumed by the
Purchaser (as detailed on Schedule 3.19), (viii) breached or violated any law,
statute, rule or regulation applicable to the Sellers or the Business in any
material respect, (ix) suffered any material adverse change in the financial
position or results of operations of the Business, (x) declared or paid any
dividend or distribution on their capital stock, or repurchased or otherwise
acquired any shares of their capital stock or any option, warrant, right, call
or commitment relating to their capital stock or any outstanding securities or
obligations convertible into or exchangeable for any shares of their capital
stock, (xi) increased the compensation payable or to become payable to any of
their officers or employees or increased any bonus, severance, accrued vacation,
insurance, pension or other employee benefit plan, payment or arrangement made
by any of them for or with any such officers or employees, (xii) suffered any
labor dispute, strike or other work stoppage, (xiii) amended any of their
Articles of Incorporation or by-laws or taken any action in contemplation of any
such amendment or in contemplation of such entity's liquidation or dissolution
and, to the Sellers' and the Shareholder's Knowledge, no such action has been
taken by the shareholders, directors or officers of any Seller, (xiv) made or
entered into any contract or other agreement requiring it to make payments in
excess of $50,000 per annum, individually or in the aggregate, other than in the
ordinary course of business consistent with past practices, (xv) engaged in any
transaction out of the ordinary course of business, or (xvi) entered into any
agreement to do any of the foregoing.
<PAGE>
Section 3.12. Governmental Authorizations; Licenses. The Business has
been operated in compliance in all material respects with all applicable laws,
rules, regulations, codes, ordinances, orders, policies and guidelines of all
Governmental Authorities, including but not limited to, those related to:
pricing, sales or distribution of products, antitrust, trade regulation, trade
practices, sanitation, land use and similar laws. The Sellers have all permits,
licenses, approvals, certificates, titles, fuel permits, franchises, operating
authorities (including any necessary FAA or ICC operating authorities), state
operating licenses or registrations and other interstate or intrastate
regulatory licenses and other authorizations, and has made all notifications,
registrations, certifications and filings with all Governmental Authorities,
necessary or advisable for the operation of the Business as currently conducted
by the Sellers, except for those which, individually or in the aggregate could
not reasonably be expected to result in a Material Adverse Change. There is no
action, case or proceeding pending or, to the Shareholder's or the Sellers'
Knowledge threatened by any Governmental Authority with respect to (i) any
alleged violation by the Sellers or their Affiliates of any law, rule,
regulation, code, ordinance, order, policy or guideline of any Governmental
Authority, or (ii) any alleged failure by the Sellers or their Affiliates to
have any permit, license, approval, certification or other authorization
required in connection with the operation of the Business. No notice of any
violation of such laws has been received by the Sellers, any Affiliate of the
Sellers or the Shareholder. Schedule 3.12 sets forth a true and complete list of
all of the Sellers' permits, licenses, approvals, certificates, registrations
and other authorizations relating to the Business (the "Authorizations"). Such
Authorizations are in full force and effect and neither the Sellers nor the
Shareholder has received notification of the suspension or cancellation of, or
the intent to cancel, terminate or not renew, any thereof.
Section 3.13. Litigation. Except as otherwise set forth in Schedule
3.13, there are no lawsuits, actions, proceedings, claims, orders or
investigations by or before any Governmental Authority pending or, to the
Shareholder's or the Sellers' Knowledge, threatened against the Sellers, their
Affiliates or the Shareholder relating to the Business, the Purchased Assets, or
seeking to enjoin the transactions contemplated hereby or which could have a
material adverse effect on such transactions or on the Purchaser. There are no
facts or circumstances Known to the Shareholder or the Sellers 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. The litigation listed on Schedule 3.13 is fully covered by
insurance. Notwithstanding any listing on Schedule 3.13, the Purchaser is not
assuming any litigation or judgments, and the Sellers and the Shareholder will
indemnify, defend and hold the Purchaser harmless with respect to all such
matters.
Section 3.14. Undisclosed Liabilities. Other than those reflected in
the Financial Statements, there are no material liabilities of the Sellers 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.
<PAGE>
Section 3.15. Taxes. All federal, state, county, local and foreign tax
returns and reports of the Sellers required to be filed which relate to or
affect the Business or the Purchased Assets have been duly and timely filed
(except where extensions permitted by law or regulation have been duly
requested). There are no examinations in progress or claims against the Seller
for federal, state, local and other taxes (including penalties and interest) for
any period or periods and no notice of any claim for taxes, whether pending or
threatened has been received. All federal, state, county, local, foreign and any
other taxes (including all income, withholding and employment taxes as well as
interest and penalties thereon) owed by Sellers that were due and payable before
the Closing Date. There are no tax liens on any of the Purchased Assets.
Section 3.16. Insurance. At all times prior to the execution of this
Agreement, the Sellers have maintained appropriate and adequate insurance
policies covering the Purchased Assets and all aspects of the Business. Such
insurance policies are currently in full force and have remained in full force
and effect through the Closing. Schedule 3.16 lists all insurance policies in
effect with respect to the Sellers or the Business during the past three (3)
years, 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.
Section 3.17. Environmental Matters. Except as set forth on Schedule
3.17 or as would not cause a Material Adverse Change, (i)the Business is being
and has been conducted in compliance with all Environmental Laws, (ii) the
Business 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, (iii) neither the Sellers nor the Shareholder has
received any notice from any Governmental Authority that the Sellers 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 Business, (iv) no reports have been filed, or have been required
to be filed, by the Sellers or the Shareholder, concerning the release of any
Regulated Substance or the violation of any applicable Environmental Law, on or
at the properties used in the Business, (v) there have been no environmental
investigations, studies, audits, tests, reviews, or other analyses conducted by
or which are in the possession of the Sellers or any Affiliate of the Sellers
relating to the Business, true and complete copies of which have not been
delivered to the Purchaser and CDL prior to the date hereof, (vi) no Regulated
Substance has been disposed of, discharged, transferred, released or transported
from the Sellers' business premises, other than as permitted under, or in
compliance with, applicable Environmental Law pursuant to appropriate
regulations, permits or authorizations, and (vii) there are no civil, criminal
or administrative actions, suits, demands, claims, hearings, investigations or
other proceedings pending or, to Sellers' Knowledge, threatened against the
Business or the Sellers or any Affiliate of the Sellers with respect to the
Business or the Purchased Assets relating to any violations, or alleged
violations, of any Environmental Law, and neither the Sellers, any Affiliate of
the Sellers nor the Shareholder has received any notices, demand letters or
requests for information, arising out of, in connection with, or resulting from,
<PAGE>
a violation, or alleged violation, of any Environmental Law, and neither the
Sellers, any Affiliate of the Sellers or the Shareholder has been notified by
any Governmental Authority or any other Person that the Business or the
Purchased Assets have, or may have, any liability pursuant to any Environmental
Law.
Section 3.18. Proprietary Rights. (a) All of the Seller's Proprietary
Rights are listed in Schedule 3.18. Except as disclosed in Schedule 3.18, the
Seller owns and possesses all right, title and interest in the Proprietary
Rights. Upon consummation of the transactions contemplated hereby, the Purchaser
will own all 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 Rights has been made, is
currently pending or, to the Sellers' Knowledge is threatened. The Sellers have
not received any notice of, 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 Sellers have 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 as now
conducted.
Section 3.19. Material Customers, Contracts and Commitments.
(a) Schedule 3.19(a) sets forth a list (the "Customer List") of all
customers with whom the Sellers (i) currently do business, (ii) are currently
actively pursuing as a prospective customer, or (iii) have done business with
since January 1, 1996. The Customer List specifies where the customers' names,
addresses, contact persons, telephone and facsimile numbers may be located.
(b) True and complete copies of all written contracts with customers,
including any amendments thereto, have been delivered by the Sellers to the
Purchaser and such documents constitute the legal, valid and binding obligation
of the Sellers and, to the Sellers' Knowledge, each other party purportedly
obligated thereunder. Schedule 3.19(b) lists all of the Sellers' contracts with
customers that are to be assumed by the Purchaser.
(c) Except to the extent set forth in Schedule 3.19(c), no one
customer or group of related customers of the Sellers account for more than 5%
of the Sellers' aggregate revenues in 1998. Except to the extent set forth on
Schedule 3.19(c), (i) none of the customers listed on Schedule 3.19(c) have
canceled or substantially reduced or, to the Knowledge of the Shareholder or the
Sellers are currently attempting or threatening to cancel or substantially
reduce service and (ii) the Sellers have complied in all material respects with
all commitments and obligations pertaining to them and is not in default under
any contracts and agreements with them and no notice of default has been
received from such customers. Schedule 3.19(c) lists the ten (10) largest
customers (in terms of aggregate sales) of the Sellers for the fiscal years
ended December 31, 1997 and 1998 and the revenues received from each such
customer during fiscal 1997 and 1998.
(d) Except as disclosed in Schedule 3.19(d), the Sellers are not in,
nor have the Sellers or the Shareholder given or received notice of, any default
or claimed, purported or alleged default, or facts that, with notice or lapse of
<PAGE>
time, or both, would constitute a default on the part of any party in the
performance of any obligation to be performed under any of its contracts with
its customers.
Section 3.20. Accounts Receivable. Schedule 3.20 sets forth a true and
complete listing of all accounts receivable of the Sellers as of March 31, 1999
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 at March 31, 1999 and at the
Closing Date 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), and have been billed.
Section 3.21. Books and Records. The books and records of the Sellers,
including financial records and books of account, are complete and accurate and
have been maintained in accordance with sound business practices.
Section 3.22. 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
Sellers or the Shareholder in connection with this Agreement or any of the
transactions contemplated hereby. The Sellers and the Shareholder have not
employed any broker or agent in connection with the transactions contemplated by
this Agreement.
Section 3.23. Net Worth of the Seller. As of March 31, 1999 and the
date hereof, each Seller has a positive net worth and is not subject to any
bankruptcy or insolvency proceedings. Each Seller has been, and after
consummation of this transaction will be, able to satisfy all of its debts in
full as they come due.
Section 3.24. Affiliates. Neither the Sellers nor the Shareholder have
any interest in, nor Affiliation with, any entity or person in the air or ground
messenger or delivery business or any related business.
Section 3.25. Year 2000. Except for the Micro Express Courier Dispatch
Accounting System, which will be replaced with the Data Track System, to the
extent that any functionality of any computer system or software used by the
Sellers is dependent upon or interdependent with the use or specification of any
calendar date, the Sellers have used commercially reasonable efforts in
implementing, and has implemented, a plan pursuant to which any such computer
system shall be "Year 2000 Complaint". For purposes of this Section, the term
"Year 2000 Compliant" means that neither the performance nor the functionality
of such computer systems or software shall be materially affected by dates in,
into and between the 20th and 21st centuries. To be deemed "Year 2000
Compliant", such computer systems shall conform in all material respects to the
following basic requirements: (i) no value for a current date shall cause any
interruption in the operations of the Sellers in which computer systems or
<PAGE>
software are used; and (ii) any date-based functions shall operate and perform
in a consistent manner for dates in, into and between the 20th and 21st
centuries and such computer systems and software shall calculate, manipulate and
represent dates correctly.
Section 3.26. Full Disclosure. No representation or warranty made by
the Shareholder or the Sellers in this Agreement, any Schedule, or any
certificate delivered, or to be delivered, by or on behalf of the Sellers or the
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 IV
Representations and Warranties of the Purchaser and CDL
The Purchaser and CDL represent and warrant to the Sellers and the
Shareholder as follows:
Section 4.1. Organization. Except as set forth on Schedule 4.1, the
Purchaser and CDL are each corporations duly organized, validly existing and in
good standing under the laws of the State of Missouri and Delaware,
respectively, and have full power and authority, corporate and other, to own
their respective properties and assets and to carry on their respective
businesses as presently conducted except where the failure to be so qualified
would not have a material adverse effect on their respective businesses.
Section 4.2. Authorization. The Purchaser and CDL have full power and
authority, corporate and other, to execute and deliver this Agreement, and other
documents related hereto, including the Notes and the Employment Agreement, and
to perform their respective obligations hereunder, all of which have been duly
authorized by all requisite corporate action. This Agreement, has been or, at
the time of delivery will be, duly authorized, executed and delivered by the
Purchaser and CDL and constitute or, at the time of delivery will constitute, a
valid and binding agreement of the Purchaser and CDL, enforceable against the
Purchaser and CDL in accordance with its terms.
Section 4.3. Non-contravention. Neither the execution and delivery of
this Agreement nor the performance by the Purchaser or CDL of their respective
obligations hereunder will (i) contravene any provision their respective
Certificates 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 CDL or the Purchaser is a
party or by which either is bound or to which any of their respective assets or
properties are subject, or (iii) result in the acceleration of, or permit any
Person to accelerate or declare due and payable prior to its stated maturity,
any liability of CDL or the Purchaser.
<PAGE>
Section 4.4. No Consents. No notice to, filing with, or authorization,
registration, consent or approval of any Governmental Authority or other Person
is necessary for the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby by the Purchaser and CDL
and the delivery to Sellers of the Notes, CDL Stock and Employment Agreement.
Section 4.5. Brokers. No person is or will be entitled to a broker's,
finder's, investment banker's, financial adviser's or similar fee from the
Purchaser or CDL in connection with this Agreement or any of the transactions
contemplated hereby.
Section 4.6. SEC Documents. The SEC Documents adequately and correctly
describe the business of CDL as at their respective dates. The SEC Documents
comply in all material respects with the requirements of the Securities Exchange
Act of 1934 as amended (the "Exchange Act") and the rules and regulations
thereunder. The SEC Documents do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of CDL included in the SEC
Documents fairly present the consolidated financial condition, results of
operation and cash flows of CDL as of the respective dates thereof and for the
periods referred to therein. The SEC Documents constitute all reports required
to be filed by CDL pursuant to Section 13 of the Exchange Act from January 1,
1998 through the Closing Date. Since December 31, 1998, there has been no
Material Adverse Change in CDL or the Purchaser or their businesses.
Section 4.7 CDL Stock. All of the CDL Stock will be, when issued in
accordance with this Agreement, duly authorized, validly issued, fully paid,
nonassessable and free and clear of any claims, liens, pledges, charges,
encumbrances, security interests, options, restrictions on transfer (except
those pursuant to Sections 5.11 and 5.12), rights of first refusal, pre-emptive
or other rights or any other imperfections of title whatsoever.
Section 4.8 Independent Investigation. Purchase and CDL have each made
its own investigation and determination regarding the Sellers and the Business,
their nature and valuation, and their purchase thereof. Neither Purchaser nor
CDL has relied on any representations, statements or warranties of Sellers, its
agents or employee or the Shareholder, except as specifically set forth in this
Agreement.
Section 4.9 Full Disclosure. No representation or warranty made by the
CDL or the Purchaser in this Agreement, or any certificate delivered, by or on
behalf of CDL or Purchaser 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.
<PAGE>
ARTICLE V
Covenants and Agreements
Section 5.1. Closing Documents. The Shareholder and the Sellers shall,
prior to or on the Closing Date, execute and deliver, or cause to be executed
and delivered to the Purchaser and CDL, the documents or instruments described
in Section 6.1. The Purchaser and CDL shall, prior to or on the Closing Date,
execute and deliver, or cause to be executed and delivered, to the Sellers and
the Shareholder, the documents or instruments described in Section 6.2.
Section 5.2. Taxes. (a) The Shareholder or the Sellers shall pay any
transfer, sales, purchase, or use tax under the laws of any Governmental
Authority arising out of or resulting from the purchase of the Purchased Assets
(collectively, "Transfer Taxes"), except that Purchaser shall pay any California
state sales tax or use tax on the vehicles being transferred to Purchaser
("Vehicle Transfer Taxes"). The Shareholder or the Sellers shall prepare and
file any required tax returns and other required documents with respect to the
Vehicle Transfer Taxes (unless where Purchaser is required by law to make the
filing) and shall promptly provide the Purchaser and CDL with evidence of the
payment of such taxes. The Purchaser shall reimburse the Shareholder or the
Sellers, as appropriate, for such Vehicle Transfer Taxes paid within 10 days of
receiving proof of a Seller's or Shareholder's payment.
(b) The Shareholder or the Seller shall (i) prepare and file all tax
returns reporting the income of the Sellers attributable to the Purchased Assets
or the operation of the Business for all periods ending on or prior to the
Closing Date, (ii) prepare and file all income tax returns reporting the income
of the Seller arising on the Closing Date from the sale to the Purchaser and CDL
of the Purchased Assets, (iii) be responsible for the conduct of all tax
examinations relating to the tax returns referred to in (i) and (ii) above, and
(iv) pay all taxes attributable to the Purchased Assets or the operation of the
Business due with respect to the tax returns referred to in (i) and (ii) above.
The Purchaser and/or CDL shall prepare and file all tax returns reporting the
income attributable to the ownership of the Purchased Assets and the operation
of the Business for all periods beginning after the Closing and shall be liable
for and pay all taxes due in respect of such tax returns.
(c) All personal property, motor vehicle (including road use) and
other ad valorem taxes, if any, and all other taxes, charges or assessments
(excluding California sales tax on the sale of the Purchased Assets to the
Purchaser) (collectively, "Property Taxes) levied or imposed upon the Purchased
Assets by any Governmental Authority, for the taxable year beginning before and
ending after the Closing Date shall be apportioned and pro rated on a per diem
basis between the Purchaser and the Sellers as of 11:59 p.m. on the Closing
Date. The Shareholder shall timely pay or cause to be timely paid all Property
Taxes for all taxable periods ending prior to the Closing Date. The Purchaser
and CDL shall timely pay all other taxes and assessments against the Purchased
Assets for all periods beginning after the Closing Date.
(d) The Purchaser and CDL on the one hand, and the Shareholder and
Sellers on the other, shall, each, at their own expense, cooperate with, and
make available to each other such tax data, documents and other information as
<PAGE>
may be reasonably required in connection with (i) the preparation or filing of
any tax return, election, consent or certification, or any claim for refund,
(ii) any determinations of liability for taxes, or (iii) any audit, examination
or other proceeding with respect to taxes (collectively, the "Tax Data"). Such
cooperation shall include, without limitation, making employees and independent
auditors reasonably available on a mutually convenient basis for all reasonable
purposes, including, without limitation, to provide explanations and background
information and to permit the copying of books, records, schedules, workpapers,
notices, revenue agent reports, settlement or closing agreements and other
documents containing the Tax Data (the "Tax Documentation"). The Tax Data and
the Tax Documentation shall be retained until one year after the expiration of
all applicable statutes of limitations (including extensions thereof) provided
however, that in the event an audit, examinations, investigations or other
proceeding has been instituted prior to the expiration of an applicable statue
of limitations, the Tax Data and Tax Documentation relating thereto shall be
retained until there is a final determination thereof.
Section 5.3. Change of Name. Promptly after the Closing, at the
Purchaser's request, each Seller shall change its name to a new name bearing no
resemblance to its present name and not containing the words Westwind, Fastrak,
Logistics, Sierra, Delivery or any variation thereof or name similar thereto.
After the Closing, the Sellers shall not use any such name or any name similar
thereto or which is reasonably believed by the Purchaser or CDL to be confused
with such name or the Business. At or after the Closing, if requested by the
Purchaser, the Shareholder shall deliver to the Purchaser a duly adopted and
executed Certificate of Amendment to the Sellers' Articles of Incorporation
effectuating such name change, in form and substance satisfactory to the
Purchaser and CDL, and the Sellers hereby appoint the Purchaser and CDL as its
agents to effect the filing of the Certificate of Amendment with the Secretary
of State of California at the Purchaser's sole cost and expense. From and after
the Closing, the Sellers consent to the use by the Purchaser and CDL of any
assumed names, fictitious names, trade names or other similar names of the
Sellers, each of which is and shall be included in the Purchased Assets.
Section 5.4. Non-Competition and Confidentiality Agreement. (a) For a
period ending on the later of the date (x) five (5) years after the Closing Date
or (y) as to the Shareholder, two (2) years after the date that Shareholder's
employment relationship with the Purchaser or any affiliate of the Purchaser
terminates, the Shareholder and the Sellers will not directly or indirectly:
(i) engage in the ground and air courier business or small
package delivery business in any of the following geographic regions (with each
region being deemed a separate and independent covenant): (A) the counties of
Los Angeles, Ventura, Orange, Sacramento, or Fresno in the State of California;
(B) the counties of San Francisco and Alameda in the State of California; (C)
the area within 25 miles of any facilities of the Sellers' existing on the date
hereof; (D) anywhere in the State of Missouri or (E) anywhere in the State of
Kansas (the "Territory");
<PAGE>
(ii) call upon any person who is, at that time, an employee of
the Purchaser or CDL (including the subsidiaries of either thereof) for the
purpose or with the intent of enticing such employee away from or out of the
employ of the Purchaser or CDL;
(iii) call upon any person or entity (x) which is, at that time,
or which has been, within one (1) year prior to that time, a customer of the
Purchaser or CDL (including the subsidiaries of either thereof) or (y) which was
a customer of the Seller in the 18 month period preceding the Closing, for the
purpose of soliciting or selling products or services in direct competition with
the Purchaser or CDL anywhere in the United States; or
(iv) use for its own benefit or divulge or convey to any third
party, any Confidential Information (as hereinafter defined) relating to the
Business. For purposes of this Agreement, Confidential Information consists of
all information, knowledge or data relating to the Business 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 the Business 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 the Shareholder or the
Sellers do not directly or indirectly cause such information to enter the public
domain.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit the Shareholder from acquiring, solely as an investment, not more than
three percent (3%) of the capital stock of a competing business whose stock is
traded on a national securities exchange or over-the-counter.
(b) The Shareholder and the Sellers acknowledge that the restrictions
contained in this Section 5.4 are reasonable and necessary to protect the
legitimate interests of the Purchaser and CDL and that any breach by the
Shareholder or the Sellers of any provision hereof will result in irreparable
injury to the Purchaser and CDL. The Sellers and the Shareholder acknowledge
that, in addition to all remedies available at law, the 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 the Purchaser nor CDL shall be required to post any
bond or other security in connection with any proceeding to enforce this Section
5.4.
(c) It is specifically agreed that the time periods stated at the
beginning of this Section 5.4, during which the agreements and covenants of the
Shareholder and the Sellers shall be effective, shall be computed by excluding
from such period any time during which either the Shareholder or the Sellers are
in violation of any provision of this Section 5.4.
<PAGE>
(d) Each of the covenants in this Section 5.4 shall be construed as an
agreement independent of any other provision in this Agreement or any other
agreement, and the covenant for each geographic area named in Section 5.4(a)(i)
shall each be deemed an independent covenant. The existence of any claim of the
Sellers or the Shareholder against the Purchaser or CDL shall not constitute a
defense to the enforcement of such covenants; provided, however, that these
covenants shall terminate if CDL and the Purchaser fail to make any payment,
within the later of 30 days after the date due (notwithstanding any standstill
that may be applicable under (b) (iii) of Article One of the Notes) or the
resolution of all outstanding disputes, to the Sellers or the Shareholder under
the Notes, the Prepayments, the earn out provisions hereof or the Employment
Agreement.
(e) If any court determines that the provisions of this Section 5.4,
or any part hereof, is unenforceable because of the duration or geographic scope
of such provisions, such court shall reduce the duration or scope of such
provisions, as the case may be, so that, as so reduced, such provisions are then
enforceable to the maximum extent permitted by applicable law.
Section 5.5. Best Efforts; Further Assurances. (a) Subject to the
terms and conditions herein provided all of the parties to this Agreement, shall
use their 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. The Seller and the Shareholders
will take all steps to assure that documents of transfer executed and delivered
by the Sellers and the Shareholder are sufficient to convey good and marketable
title to the Purchased Assets to the Purchaser, free and clear of all
Encumbrances. Each of the parties to this Agreement 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. In the event that at any time after Closing any further action is
necessary to carry out the purposes of this Agreement, the parties to this
Agreement shall take all such action without any further consideration therefor.
(b) The Sellers and the Shareholder also shall take such actions and
deliver such documents as the Purchaser may reasonably request from time to time
to perfect the Purchaser's title and ability to use and dispose of the Purchased
Assets. In addition, each party to the Agreement shall use its best efforts to
provide the other parties with any financial or other information required for
SEC disclosure, tax returns or other governmental compliance.
Section 5.6. Employment Matters. (a) Except as otherwise set forth in
(b) below, neither the Purchaser nor CDL or any of the subsidiaries of either
thereof will have any liability or responsibility as to any employee of the
Sellers. Neither CDL nor the Purchaser shall have any obligation to hire any
employees of the Sellers, but the Purchaser may offer employment to any
employees of the Sellers; provided, that the Sellers shall remain solely
responsible for all amounts due to such employees through the Closing Date,
except for vacation accrued by such employees after May 1, 1998, for which
Purchaser shall be responsible.
<PAGE>
(b) On the Closing Date, the Purchaser and the Shareholder shall enter
into an employment agreement in the form attached hereto as Exhibit C (the
"Employment Agreement").
Section 5.7. Audited Financial Statements of the Sellers. All fees and
expenses incurred in connection with audits of the financial statements of the
Sellers for the fiscal years ended December 31, 1997 and 1998 shall be the sole
responsibility of the Sellers and the Shareholder. The Sellers shall use best
efforts to provide CDL, by May 10, 1999, a copy of the Sellers' audited balance
sheets as of December 31, 1998 and the related audited statements of earnings
and cash flows for the period then ended, with notes thereto, audited by the
Sellers' Accountants.
Section 5.8. Access and Information. No investigation by any party to
this Agreement made shall modify or otherwise affect any representations and
warranties of the Sellers or the Shareholder, which shall survive any such
investigation, or the conditions to the respective obligations of any party to
this Agreement to consummate the transactions contemplated hereby.
Section 5.9. Collection of Accounts Receivable by the Purchaser.
Notwithstanding the retention of its accounts receivable by the Sellers, on and
after the Closing Date, all accounts receivable of the Sellers listed on
Schedule 3.20 shall be collected solely by the Purchaser and the Sellers shall
cease all collection efforts. Collections from a customer shall be applied to
the oldest outstanding receivable of that customer, as set forth on Schedule
3.20, unless either (x) the customer otherwise directs or (y) the amount of the
payment exactly matches the amount of a invoice, in which case the payment shall
be applied to the earliest matching invoice or the invoice to which the customer
has directed payment, as the case may be. If the Sellers collect any accounts
notwithstanding cessation of collection efforts, the Sellers shall notify the
Purchaser on the same day as collection is received and cause all funds
collected to be applied as if collected by the Purchaser hereunder. The
Purchaser will turn over all collections received with respect to accounts
receivable of the Sellers listed on Schedule 3.20 to the Sellers. Turnover of
collections of the Sellers' accounts will be made by the Purchaser as soon after
collection as practical; provided, however that payment need not be made more
than once every month. The Purchaser shall have no liability whatsoever to the
Sellers for failure or inability to collect any accounts of the Seller or to pay
sums over to the Sellers other than for willful misconduct. The Purchaser shall
use commercially reasonable efforts to collect Sellers' accounts receivable,
consistent with the efforts it takes to collect its own accounts receivable;
provided, however that nothing contained in this Agreement shall require the
Purchaser to institute legal proceedings or otherwise incur any out-of-pocket
expenses to collect of any of the Sellers' accounts.
Section 5.10 Securities Law Matters. The Shareholder represents that
he, or his purchaser representative, has read, reviewed and understood the
information provided pursuant to this Agreement and the other documentation and
information furnished by the Purchaser or CDL (including CDL's Form 10-K for the
year ended December 31, 1998, its Forms 8-K or 8-KA filed February 22 and
<PAGE>
February 26, 1999, its Registration Statement on Form S-4, and its proxy
statement for its annual meeting to be held in June, 1999 (the "SEC Documents"))
and has had ample opportunity to ask questions of and receive answers from the
officers of CDL, concerning CDL, the Note, the CDL Stock and CDL's business. The
Purchaser and CDL have provided to the Sellers and the Shareholder an
opportunity to obtain any and all additional information necessary for them to
verify the accuracy of the information supplied by those individuals. The
Registration Statement on Form S-4 and the other SEC Documents were received and
reviewed at the time of commencement of negotiations for the transaction.
Except as set forth in the documents which the Sellers and the
Shareholder have reviewed, no representations or warranties have been made to
the Sellers and the Shareholder by the Purchaser or CDL concerning CDL, the
Note, the CDL Stock or CDL's business. In entering into this transaction,
neither the Sellers nor the Shareholder is relying upon any information not
contained in the SEC Documents, other than the results of their own independent
investigation.
Section 5.11 Restrictions on Transfer. (a) The Shareholder
acknowledges that he has been advised that he might be considered to be an
"affiliate" of the Company for purposes of Rule 145 ("Rule 145") of the General
Rules and Regulations (the "Rules and Regulations") of the SEC under the
Securities Act. The Shareholder represents and warrants to, and agrees with, the
Purchaser and CDL that:
(i) The Shareholder shall not make any sale, transfer or other
disposition of CDL Stock in violation of the Securities Act or the Rules and
Regulations promulgated thereunder.
(ii) The Shareholder has been advised that the offering, sale and
delivery of the CDL Stock to him pursuant hereto has been registered under the
Securities Act on a Registration Statement on Form S-4. The Shareholder has also
been advised, however, that since he may be deemed to be an "affiliate" of the
Company as of the date hereof, any public offering or sale by him of any of the
CDL Stock will, under current law, require either (i) the further registration
under the Securities Act of the CDL Stock to be offered and sold, (ii)
compliance with Rule 145, or (iii) the availability of another exemption from
such registration under the Securities Act.
(iii) The Shareholder has read the provisions of this Agreement,
including the provisions of this Section 5.11, and has discussed their
requirements and other applicable limitations upon his ability to sell, transfer
or otherwise dispose of the CDL Stock, to the extent the Shareholder felt
necessary, with his counsel.
(iv) The Shareholder understands that stop transfer instructions
will be given to CDL's transfer agent with respect to the shares of the CDL
Stock and that there will be placed on the certificates for the shares of the
CDL Stock, or any substitutions therefor, a legend stating in substance:
<PAGE>
"The shares represented by this certificate were
issued in a transaction to which Rule 145 promulgated
under the Securities Act of 1933, as amended (the
"Act"), applies, and may be sold or otherwise
transferred only in compliance with the limitations of
such Rule 145, or upon receipt by the Company of an
opinion of counsel acceptable to it that some other
exemption from registration under the Act is available,
or pursuant to a registration statement under the Act.
(v) The Shareholder hereby agrees that, for a period of one (1)
year following the Closing Date, the Shareholder will obtain an agreement
similar to this from each transferee of the CDL Stock sold or otherwise
transferred by the Shareholder, but only if such transaction is effected other
than in a transaction involving a registered public offering or as a sale
pursuant to Rule 145.
(b) CDL agrees that the restrictions set forth in Section 5.11(a)
shall terminate and be of no further force and effect, the legend set forth in
Section 5.11(a)(v) above shall be removed by delivery of substitute certificates
without such legend and the related stop transfer restrictions shall be lifted
forthwith if (i) any such shares of CDL Stock shall have been registered under
the Securities Act for sale, transfer or other disposition by the Shareholder or
on the Shareholder's behalf or (ii) any such shares of CDL Stock are sold in
accordance with the provisions of paragraphs (c), (e), (f) and (g) of Rule 144
promulgated under the Securities Act or (iii) the Shareholder is not at the time
an "affiliate" of CDL and has held the CDL Stock for at least one (1) year (or
such other period as may be prescribed by the Securities Act and the Rules and
Regulations promulgated thereunder) and CDL has filed with the SEC all of the
reports it is required to file under the Securities Exchange Act of 1934, as
amended, during the preceding twelve (12) months or (iv) the Shareholder is not
and has not been for at least three months an "affiliate" of CDL and has held
the CDL Stock for at least two (2) years (or such other period as may be
prescribed by the Securities Act and the Rules and Regulations promulgated
thereunder) or (v) CDL shall have received a letter from the staff of the SEC,
or an opinion of counsel acceptable to CDL, to the effect that the stock
transfer restrictions and the legend are not required.
Section 5.12. Lock-Up of CDL Stock. The Sellers and the Shareholder
agree that they shall not offer to sell, contract to sell or otherwise sell,
dispose of, loan, pledge or grant any rights with respect to (collectively, a
"Disposition") the shares of CDL Stock other than as follows: (i) an aggregate
of 25% of the shares of the CDL Stock issued hereunder may be transferred
immediately following the Closing, and (ii) the remaining 75% of the share of
CDL Stock issued hereunder may be transferred at any time to the Shareholder or
at any time after the first anniversary of the Closing, subject to applicable
law. The foregoing restriction is expressly intended to preclude each Seller and
the Shareholder from engaging in any hedging or other transaction which is
designed to or reasonably expected to lead or result in a Disposition of the CDL
Stock during the periods indicated in the first sentence of this Section 5.12
even if such CDL Stock would be disposed of by someone other than the Sellers.
The Sellers and the Shareholder consent to the entry of stop transfer
instructions with the transfer agent for CDL against the transfer of the CDL
<PAGE>
Stock held by them except in compliance with this Section 5.12. The certificates
representing 75% of CDL Stock issued as part of the Purchase Price shall bear an
appropriate restrictive legend to effect the foregoing.
Section 5.13 Purchase of Vans. Fastrak has informed the Purchaser that
it has agreed to purchase 15 propane gas vans (1998 Ford E250 vans) at a price
of $26,242.22 (including all taxes and license fees). Payment terms for such
vans is 25% in cash upon delivery and 75% pursuant to seller financing from Ford
Motor Credit in the form of notes and payable over 4 years. Delivery of the vans
is expected on or about May 15, 1999. Upon consummation of Fastrak's purchase
from Ford, Fastrak agrees to sell, and the Purchaser agrees to purchase, all of
such vans, at a price equal to 75% of Fastrak's purchase price, with such
purchase price to be equal to Fastrak's obligations under the notes due to Ford
Motor Credit. Purchaser agrees to pay all Vehicle Transfer Taxes from its
purchase of the vans from Fastrak. In addition, as part of the government
program, the Purchaser agrees to sell 15 of its vans to Ford upon delivery of
the 15 new vans. Fastrak shall retain any rights it may have to reimbursement
for part of the purchase price pursuant to any governmental program.
ARTICLE VI
Deliveries at Closing
Section 6.1. Deliveries by the Shareholder and the Sellers.
Simultaneously with the execution of this Agreement, the Shareholder or the
Seller, as the case may be, shall have delivered to the Purchaser and CDL all
instruments of assignment, transfer and conveyance identified herein and such
other closing documents as shall be reasonably requested by the Purchaser and
CDL in form and substance acceptable to the Purchaser's counsel, including the
following:
(a) such instruments of sale, transfer, assignment, conveyance
and delivery (including all vehicle titles), in form and substance
reasonably satisfactory to counsel for the Purchaser and CDL
(including without limitation a Bill of Sale and an Assignment and
Assumption Agreement), as are required in order to transfer to the
Purchaser good and marketable title to the Purchased Assets, free and
clear of all Encumbrances;
(b) a certificate of the Director of Finance of each Seller,
dated the Closing Date, as to the incumbency of any officer of the
Sellers executing this Agreement or any document related thereto;
(c) a certified copy of (1) the Articles of Incorporation and
By-laws of each Seller and all amendments thereto, (2) a certificate,
dated as of no later than 10 days prior to the Closing Date, duly
issued by the Secretary of State of the State of California, showing
each Seller is in good standing and authorized to do business in such
<PAGE>
jurisdiction, and (3) the resolutions of each Seller's Board of
Directors authorizing the execution, delivery and consummation of this
Agreement, the instruments of transfer and the transactions
contemplated hereby;
(d) an opinion of Howard Rice, counsel to the Shareholder and the
Sellers, dated the Closing Date, in form and substance reasonably
satisfactory to counsel for the Purchaser and CDL;
(e) Assignments of Leases and Landlord consents and Estoppel
Certificates from each landlord for any lease being assigned by the
Sellers to the Purchaser, all to the Purchaser's reasonable
satisfaction;
(f) the Shareholder shall have entered into the Employment
Agreement with the Purchaser; and
(g) such other documents or instruments as the Purchaser and CDL
reasonably request to effect the transactions contemplated hereby.
6.2 Deliveries by CDL and the Purchaser. Simultaneously with the
execution of this Agreement, the Purchaser and CDL shall have delivered to the
Shareholder and the Sellers such closing documents as shall be reasonably
requested by the Shareholder and the Sellers in form and substance reasonably
acceptable to the Shareholder's counsel, including the following:
(a) the Assignment and Assumption Agreement executed by the
Purchaser and dated the Closing Date;
(b) certificates of the Secretary or Assistant Secretary of the
Purchaser and CDL, respectively dated the Closing Date, as to the
incumbency of any officer of the Purchaser and CDL executing this
Agreement, or any document related thereto;
(c) a certified copy of (1) the Certificate of Incorporation and
By-laws of the Purchaser and all amendments thereto and (2) the
resolutions of the Purchaser's Board of Directors and CDL's Board of
Directors authorizing the execution, delivery and consummation of this
Agreement and the transactions contemplated hereby;
(d) payment of the Purchase Price as set forth in Section 2.2
including delivery of the Notes and the CDL Stock, both executed by
authorized officers of CDL;
(e) the Purchaser shall have entered into the Employment
Agreement with the Shareholder; and
(f) an opinion of Purchaser's and CDL's counsel.
<PAGE>
ARTICLE VII
Survival of Representations and Warranties; Indemnification
Section 7.1. Survival of Representations and Warranties. Except as set
forth below, the representations and warranties provided for in this Agreement
shall survive the Closing for two (2) 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 3.15 [and 3.17] shall
survive the Closing and remain in full force and effect for six (6) years. The
survival period of each representation or warranty as provided in this Section
7.1 is hereinafter referred to as the "Survival Period."
Section 7.2. Indemnification. (a) The Shareholder and the Sellers
jointly and severally shall indemnify, defend and hold harmless the Purchaser
and CDL or any of 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, reasonable
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 Sellers or the Shareholder in this Agreement for the
applicable Survival Period, (ii) the breach by the Shareholder or the Sellers of
any covenant or agreement to be performed by them hereunder, (iii) any liability
due to or incurred in favor of the Sellers' employees for periods of their
employment with the Sellers, (iv) any liability from or related to the Purchased
Assets arising from events occurring before the Closing Date, (v) any tax
liability, except Vehicle Transfer Taxes, incurred or accrued through and
including the Closing Date, and (vi) any other Excluded Liability.
(b) The Purchaser and CDL jointly and severally shall indemnify,
defend and hold harmless the Shareholder and the Sellers and any of 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 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 Purchaser or CDL in this Agreement for the applicable
Survival Period, (ii) the breach by the Purchaser or CDL of any covenant or
agreement to be performed by them hereunder, and (iii) any Assumed Liability,
(iv) any liability from or related to the Purchased Assets arising from events
occurring after the Closing Date, and (v) any liability due to CDL's or
Purchaser's employees for periods of their employment with CDL or Purchaser.
(c) Any Person providing indemnification pursuant to the provisions of
this Section 7.2 is hereinafter referred to as an "Indemnifying Party" and any
Person entitled to be indemnified pursuant to the provisions of this Section 7.2
is hereinafter referred to as an "Indemnified Party."
Section 7.3. Procedures for Third Party Claims. In the case of any
claim for indemnification arising from a claim of a third party (a "Third Party
<PAGE>
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. Notwithstanding anything in
this Agreement to the contrary, the Indemnified Party, at the expense of the
Indemnifying Party, shall 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 (i) such Third Party Claim seeks an order, injunction or other
equitable relief against the Indemnified Party, (ii) the Indemnified Party shall
have reasonably concluded that (x) there is a conflict of interest between the
Indemnified Party and the Indemnifying Party in the conduct of the defense of
such Third Party Claim or (y) the Indemnified Party has one or more defenses not
available to the Indemnifying Party or (iii) the Indemnifying Party shall not in
fact have employed counsel to assume the defense of such 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 claim or demand which shall be settled by the
Indemnified Party without the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld or delayed.
Section 7.4. Procedures for Inter-Party Claims. In the event that an
Indemnified Party determines that it has a claim for Damages against an
Indemnifying Party hereunder (other than as a result of a Third Party Claim),
the Indemnified Party shall give prompt written notice thereof to the
Indemnifying Party, specifying the amount of such claim and any relevant facts
and circumstances relating thereto. The Indemnified Party shall provide the
Indemnifying Party with reasonable access to its books and records for the
purpose of allowing the Indemnifying Party a reasonable opportunity to verify
any such claim for Damages. The Indemnified Party and the Indemnifying Party
shall negotiate in good faith regarding the resolution of any disputed claims
for Damages. Promptly following the final determination of the amount of any
Damages claimed by the Indemnified Party, the Indemnifying Party shall pay such
Damages to the Indemnified Party by wire transfer or check made payable to the
order of the Indemnified Party, without interest. In the event that the
Indemnified Party is required to institute legal proceedings in order to recover
Damages hereunder, the cost of such proceedings (including costs of
investigation and reasonable attorneys' fees and disbursements) shall be
allocated among the parties as determined in the sole discretion of the court.
Section 7.5. Right of Set-Off. The Purchaser and CDL shall have the
right to set-off, against any amount which may be owed by the Purchaser or CDL
to the Sellers or the Shareholder, including but not limited to the Notes and
the Earn out, whether due or unpaid at the time of such set-off, any amount owed
to the Purchaser and CDL by the Sellers or the Shareholder pursuant to this
Agreement or otherwise. The exercise of such right of set-off by the Purchaser
and CDL shall not constitute a breach by the Purchaser or CDL of this Agreement
<PAGE>
or the agreement underlying such obligation. The Shareholder and the Sellers
hereby grant to the Purchaser and CDL a security interest in the Notes to secure
all of the indemnification obligations of the Shareholder and the Sellers under
this Agreement.
Section 7.6 Certain Limitations. An Indemnified Party shall not make
any claim for indemnification under Section 7.2(a)(i) or 7.2(b)(i) until the
aggregate Damages for all such claims exceeds $50,000. The maximum aggregate
liability of Shareholder and Sellers on the one hand, and the Purchaser and CDL
on the other hand under Section 7.2(a)(i) and 7.2(b)(i), respectively, shall not
exceed $4,000,000.
ARTICLE VIII
Miscellaneous
Section 8.1. 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 07012
Telephone: (973) 471-1005
Facsimile: (973) 471-5519
Attention: Mark Carlesimo, Esq., General Counsel
With a copy to: Lowenstein Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068
Telephone: (973) 597-2500
Facsimile: (973) 597-2400
Attention: Alan Wovsaniker, Esq.
If to the Seller or
the Shareholder : 300 Bay Street, #26
Santa Monica, CA 90405
Telephone: (310) 581-6839
Facsimile: (310) 450-6851
Attention: Steven Keihner
With a copy to: Howard Rice, et al.
3 Embarcadero Center, 7th Floor
San Francisco, CA 94111
Telephone: (415) 434-1600
Facsimile: (415) 217-5910
Attention: Paul Reiner, Esq.
<PAGE>
Section 8.2. Expenses. Regardless of whether the transactions provided
for in this Agreement are consummated, except as otherwise provided herein, each
party hereto shall pay its own expenses incident to this Agreement and the
transactions contemplated herein.
Section 8.3. 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 United States District Court for the District of New
Jersey, located in Essex County, 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 8.4. Assignment; Successors and Assigns; No Third Party
Rights. Except as otherwise provided herein, this Agreement may not be assigned
by operation of law or otherwise, and any attempted assignment shall be null and
void. Any party hereto may assign all of their rights under this Agreement to
any Affiliate; provided such Affiliate assumes all of the obligations of such
party hereunder. No such assignment shall relieve any party hereto of their
obligations hereunder. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns and legal
representatives. This Agreement shall be for the sole benefit of the parties to
this Agreement and their respective successors, assigns and legal
representatives and is not intended, nor shall be construed, to give any Person,
other than the parties hereto and their respective successors, assigns and legal
representatives, any legal or equitable right, remedy or claim hereunder.
Section 8.5. 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 8.6. Titles and Headings. The headings and table of contents
in this Agreement are for reference purposes only, and shall not in any way
affect the meaning or interpretation of this Agreement.
Section 8.7. 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.
<PAGE>
Section 8.8. 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 8.9. Public Announcement. Except as may be required by law,
neither the Sellers or the Shareholder, on the one hand, or the Purchaser or
CDL, on the other hand, shall issue any press release or otherwise publicly
disclose this Agreement or the transactions contemplated hereby or any dealings
between or among the parties in connection with the subject matter hereof
without the prior approval of the other. 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 8.10. 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 8.11. 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 8.12. No Strict Construction. Each of the Purchaser, CDL, the
Sellers and the Shareholder acknowledge that this Agreement has been prepared
jointly by the parties hereto, and shall not be strictly construed against any
party.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
LOGISTICS DELIVERY SYSTEMS, INC. CONSOLIDATED DELIVERY &
LOGISTICS, INC.
By:_______________________________ By:_____________________
Name: Steven S. Keihner Name:
Title: President Title:
FASTRAK DELIVERY SYSTEMS, INC. CLAYTON/NATIONAL COURIER
SYSTEMS, INC.
By:__________________________
By:_______________________________ Name:
Name: Steven S. Keihner Title:
Title: President
WESTWIND EXPRESS, INC.
SIERRA DELIVERY SERVICES, INC.
By:___________________________
By:_______________________________ Name: Steven S. Keihner
Name: Steven S. Keihner Title: President
Title: President
__________________________________
Steven S. Keihner
EXHIBIT 10-2
THE MAKER HAS CERTAIN SETOFF RIGHTS PURSUANT TO AN ASSET
PURCHASE AGREEMENT DATED THIS DATE AMONG THE MAKER,
CLAYTON/NATIONAL COURIER SYSTEMS, INC., A SUBSIDIARY OF THE
MAKER, WESTWIND EXPRESS, INC., LOGISTICS DELIVERY SYSTEMS,
INC., FASTRAK DELIVERY SYSTEMS, INC. and SIERRA DELIVERY
SERVICES, INC., (collectively, the "HOLDER",) AND THE
SHAREHOLDER OF THE HOLDER.
This Note has been 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 has 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.
TRANSFER IS RESTRICTED BY SECTION 3.05.
7% SUBORDINATED NOTE DUE 2001
OF CONSOLIDATED DELIVERY & LOGISTICS, INC.
Registered Holder: WESTWIND EXPRESS, INC.
April 30, 1999
Address: 3709 Old Conejo Road No. W-1
Newbury Park, California
Principal Amount: $408,000 Clifton, New Jersey
Due: April 30, 2001
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 its order or its
registered assign(s), the principal sum above stated on April 30, 2001 and to
pay interest thereon from the date hereof at the rate of seven percent (7%) per
annum. Interest shall be computed on the balance of principal outstanding from
time to time, and payable quarterly, beginning on July 31, 1999.
Both principal hereof and interest hereon 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.
<PAGE>
PREPAYMENT
The Company may prepay this debt, in whole or in part, without premium
or penalty at any time in its discretion.
ARTICLE ONE
SUBORDINATION
(a) Subordination of Liabilities. Holder by its acceptance of this
Subordinated Note covenants and agrees that the payment of the principal of,
interest on, and all other amounts owing in respect of, this Subordinated Note
(the "Subordinated Indebtedness") is hereby expressly subordinated, to the
extent and in the manner hereinafter set forth, to the prior payment in full in
cash of all Senior Indebtedness. The provisions of this Article One shall
constitute a continuing offer to all persons who, in reliance upon such
provisions, become holders of, or continue or hold, Senior Indebtedness, and
such provisions are made for the benefit of the holders of Senior Indebtedness,
and such holders are hereby made obligees hereunder the same as if their names
were written herein as such, and they and/or each of them may proceed to enforce
such provisions.
(b) Company Not to Make Payments with Respect to Subordinated
Indebtedness in Certain Circumstances.
(i) Upon the maturity of any Senior Indebtedness (including
interest thereon or fees or any other amounts owing in respect thereof), whether
at stated maturity, by acceleration or otherwise, all Obligations owing in
respect thereof, in each case to the extent due and owing, shall first be paid
in cash, before any further payment (whether in cash, property securities or
otherwise) is made on account of the Subordinated Indebtedness.
(ii) The Company may not, directly or indirectly, make any
payment with respect to any Subordinated Indebtedness and may not acquire any
Subordinated Indebtedness for cash or property while there exists any Event of
Default under the Credit Agreement or any other issue of Senior Indebtedness
that is then in existence.
(iii) In the event the Holder receives written notice that an
Event of Default exists with respect to any Senior Indebtedness (a "Notice of
Event of Default"), the Holder agrees not to accelerate the payment of the
obligations of the Company hereunder or to bring any action with respect to the
obligations of the Company under this Subordinated Note until the earlier of (a)
receipt by the Holder of written notice that such Event of Default has been
cured, or (b) six (6) months following the date of the Notice of Event of
Default, or (c) acceleration of any Senior Indebtedness.
(iv) In the event that notwithstanding the provisions of the
preceding clauses (i) and (ii) of this Article One, the Company shall make any
payment on account of the Subordinated Indebtedness at a time when payment is
not permitted by said clause (i) or (ii), such payment shall be held by the
<PAGE>
holder of this Subordinated Note, in trust for the benefit of, and shall be paid
forthwith over and delivered to, the holders of the applicable Senior
Indebtedness or their representative or the trustee under the indenture or other
agreement pursuant to which any instruments evidencing any applicable Senior
Indebtedness may have been issued, as their respective interests may appear, for
application pro rata to the payment of all applicable Senior Indebtedness
remaining unpaid to the extent necessary to pay all applicable Senior
Indebtedness in full in accordance with the terms of such applicable Senior
Indebtedness, after giving effect to any concurrent payment or distribution to
or for the holders of such applicable Senior Indebtedness. Without in any way
modifying the provisions of this Article One or affecting the subordination
effected hereby if the hereafter referenced notice is not given, the Company
shall give the holder of this Subordinated Note prompt written notice of any
event which would prevent payments under clause (i) or (ii) of this Section (b).
(c) Subordination to Prior Payment of All Senior Indebtedness on
Dissolution, Liquidation or Reorganization of Company. Upon any distribution of
assets of the Company upon dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise):
(i) the holders of all Senior Indebtedness shall first be
entitled to receive payment in full in cash of all Senior Indebtedness
(including, without limitation, post-petition interest at the rate provided in
the documentation with respect to the Senior Indebtedness, whether or not such
post-petition interest is an allowed claim against the debtor in any bankruptcy
or similar proceeding) before the holder of this Subordinated Note is entitled
to receive any payment of any kind or character on account of the Subordinated
Indebtedness;
(ii) any payment or distributions of assets of the Company of any
kind or character, whether in cash, property or securities to which the holder
of this Subordinated Note would be entitled except for the provisions of this
Article One, shall be paid by the liquidating trustee or agent or other person
making such payment or distribution, whether a trustee in bankruptcy, a receiver
or liquidating trustee or other trustee or agent, directing to the holders of
Senior Indebtedness or their representative or representatives, or the trustee
or trustees under any indenture under which any instruments evidencing any such
Senior Indebtedness may have been issued, to the extent necessary to make
payment in full in cash of all Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness; and
(iii) in the event that, notwithstanding the foregoing provision
of this Section (c), any further payment or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, shall
be received by the holder of this Subordinated Note on account of Subordinated
Indebtedness before all Senior Indebtedness is paid in full in cash, such
payment or distribution shall be received and held in trust for and shall be
paid over to the holders of the Senior Indebtedness remaining unpaid or
unprovided for or their representative or representatives, or to the trustee or
trustees under any indenture under which any instruments evidencing any of such
Senior Indebtedness may have been issued, for application to the payment of such
<PAGE>
Senior Indebtedness until all such Senior Indebtedness shall have been paid in
full in cash, after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness.
Without in any way modifying the provisions of this Article One or
affecting the subordination effected hereby if the hereafter referenced notice
is not given, the Company shall give prompt written notice to the holder of this
Subordinated Note of any dissolution, winding up, liquidation or reorganization
of the Company (whether in bankruptcy, insolvency or receivership proceedings or
upon assignment for the benefit of creditors or otherwise).
(d) Subrogation. Subject to the prior payment in full in cash of all
Senior Indebtedness, the holder of this Subordinated Note shall be subrogated to
the rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on this Subordinated Note shall be paid in full, and for
the purpose of such subrogation no payments or distributions to the holders of
the Senior Indebtedness by or on behalf of the Company or on behalf of the
holder of this Subordinated Note shall, as between the Company, its creditors
other than the holders of Senior Indebtedness, and the holder of this
Subordinated Note, be deemed to be payment by the Company to or on account of
the Senior Indebtedness, it being understood that the provisions of this Article
One are and are intended solely for the purpose of defining the relative rights
to the holder of this Subordinated Note, on the one hand, and the holders of the
Senior Indebtedness, on the other hand.
(e) Obligation of the Company Unconditional. Nothing contained in this
Article One or otherwise in this Subordinated Note is intended to or shall
impair, as between the Company and the holder of this Subordinated Note, the
obligation of the Company, which is absolute and unconditional, to pay to the
holder of this Subordinated Note the principal of and interest on this
Subordinated Note as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the holder of this Subordinated Note and creditors of the Company
other than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the holder of this Subordinated Note from exercising all
remedies otherwise permitted by applicable law upon an event of default under
this Subordinated Note, subject to the limitations, if any, under this Article
One or the rights of Holders to exercise rights and remedies, and subject to the
rights, if any, under Article One of the holders of Senior Indebtedness in
respect of cash, property, or securities of the Company received upon the
exercise of any such remedy. Upon any distribution of assets of the Company
referred to in this Article One, the holder of this Subordinated Note shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the holder of this
Subordinated Note, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
<PAGE>
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article One.
(f) Subordination Rights Not Impaired by Acts or Omission of Company
or Holders of Senior Indebtedness. No right of any present and future holders of
any Senior Indebtedness to enforce subordination as herein provided shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act in good faith by any such
holders, or by any noncompliance by the Company with the terms and provisions of
this Subordinated Note, regardless of any knowledge thereof which any such
holder may have or be otherwise charged with. The holders of the Senior
Indebtedness may, without in any way affecting the obligations of the holder of
this Subordinated Note with respect hereto, at any time or from time to time and
in their absolute discretion, change the manner, place or terms of payment of,
change or extend the time of payment of, or renew or alter, any Senior
Indebtedness or amend, modify or supplement any agreement or instrument
governing or evidencing such Senior Indebtedness or any other document referred
to therein, or exercise or refrain from exercising any other of their rights
under the Senior Indebtedness including, without limitation, the waiver of
default thereunder and the release of any collateral securing such Senior
Indebtedness, all without notice to or assent from the holder of this
Subordinated Note.
(g) Definitions. For purposes of Article One of this Subordinated
Note, the following capitalized terms have the following meanings:
"Credit Agreement" means the Loan and Security Agreement (as amended,
modified, supplemented, extended, restated, refinanced, replaced or refunded
from time to time), originally dated as of June 14, 1997, by and between the
Company and its subsidiaries and First Union Commercial Corporation or its
affiliates and all other indebtedness due to First Union Commercial Corporation
or its affiliates, or any other bank or similar financial institution.
"Mezzanine Agreement" means the Senior Subordinated Loan Agreement (as
amended, modified, supplemented, extended, restated, refinanced, replaced or
refunded from time to time), dated as of January 28, 1999, by and between the
Company, Paribas Capital Funding LLC, Exeter Venture Lenders, L.P. Exeter
Capital Partners IV, L.P. and the other Lenders from time to time party thereto.
"Obligations" means any principal, interest, premium, penalties, fees,
expenses, indemnities and other liabilities and obligations (including any
guaranties of the foregoing liabilities and obligations) payable under the
documentation governing any Senior Indebtedness (including interest accruing
after the commencement of any bankruptcy, insolvency, receivership or similar
proceeding, whether or not such interest is an allowed claim against the debtor
in any such proceeding).
"Senior Indebtedness" means all Obligations (i) of the Company under,
or in respect of, the Credit Agreement and any guaranty thereunder, (ii) of the
Company under, or, in respect of, the Mezzanine Agreement and any guaranty
thereof and (iii) of the Company with respect to indebtedness for borrowed money
and any guaranty thereof which is due to a bank or other institutional lender or
<PAGE>
which is outstanding as a result of any public offering or private placement of
debt securities arranged by a bank or financial institution and which is not
expressly by its terms made subordinated or pari passu in right of payment to
the Company's payment obligations under this Subordinated Note. This Note shall
be pari passu with other subordinated notes issued in connection with business
acquisitions by the Company.
(h) In furtherance of this Subordination the Holder agrees to execute
and deliver any and all documents requested by the Company for delivery to
holders of its Senior Indebtedness (in the form as requested by such creditors)
in order to 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, and acting unanimously,
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 and such non-payment shall continue for a period of seven
(7) days after the date that written notice of non-payment is given by the
Holder; 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.
<PAGE>
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.
Subject to the rights of holders of Senior Indebtedness, 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
MISCELLANEOUS
3.01 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.
3.02 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.
3.03 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.
3.04 Incorporation of Asset Purchase Agreement. This one of the Two
Year Notes issued pursuant to the Asset Purchase Agreement dated this date among
the Company, the Holder and others, and is subject to set off and to the other
terms and conditions of such Asset Purchase Agreement.
<PAGE>
3.05 Assignability. This Note shall be binding upon the Company, its
successors and assigns, and shall inure to the benefit of the Holder, its
successors and assigns. The Holder may assign its notes to its shareholders,
subject to Section 3.04.
3.06 Governing Law; Consent to Jurisdiction. This Note 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 Holder and the Company irrevocably submits to the non-exclusive jurisdiction
of the courts of the United States District Court for the District of New
Jersey, located in Essex County, New Jersey, for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Note and the
transactions contemplated hereby. Service of process in connection with any such
suit, action or proceeding may be served on each of the Holder and the Company
anywhere in the world by the same methods as are specified for the giving of
notices under this Note. Each of the Holder and the Company 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 of the Holder and the Company
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.
3.07 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: __________________________________
Name: MARK CARLESIMO
Title: VICE PRESIDENT
EXHIBITB 10.3
THE MAKER HAS CERTAIN SETOFF RIGHTS PURSUANT TO AN ASSET PURCHASE
AGREEMENT DATED THIS DATE AMONG THE MAKER, CLAYTON/NATIONAL COURIER
SYSTEMS, INC., A SUBSIDIARY OF THE MAKER, WESTWIND EXPRESS, INC.,
LOGISTICS DELIVERY SYSTEMS, INC., FASTRAK DELIVERY SYSTEMS, INC. and
SIERRA DELIVERY SERVICES, INC., (collectively, the "HOLDER",) AND THE
SHAREHOLDER OF THE HOLDER.
This Note has been 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
has 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.
TRANSFER IS RESTRICTED BY SECTION 6.05.
7% SUBORDINATED NOTE DUE 200
OF CONSOLIDATED DELIVERY & LOGISTICS, INC.
Registered Holder: WESTWIND EXPRESS, INC.
April 30, 1999
Address: 3709 Old Conejo Road No. W-5
Newbury Park, California
Principal Amount: $163,200 Clifton, New Jersey
Due: April 30, 2002
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 its order or its
registered assign(s), the principal sum above stated on April 30, 2002 and to
pay interest thereon from the date hereof at the rate of seven percent (7%) per
annum. Interest shall be computed on the balance of principal outstanding from
time to time, and payable quarterly, beginning on July 31, 1999.
Both principal hereof and interest hereon 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 in its discretion.
ARTICLE ONE
SUBORDINATION
(a) Subordination of Liabilities. Holder by its acceptance of this
Subordinated Note covenants and agrees that the payment of the principal of,
interest on, and all other amounts owing in respect of, this Subordinated Note
(the "Subordinated Indebtedness") is hereby expressly subordinated, to the
extent and in the manner hereinafter set forth, to the prior payment in full in
cash of all Senior Indebtedness. The provisions of this Article One shall
constitute a continuing offer to all persons who, in reliance upon such
provisions, become holders of, or continue or hold, Senior Indebtedness, and
such provisions are made for the benefit of the holders of Senior Indebtedness,
and such holders are hereby made obligees hereunder the same as if their names
were written herein as such, and they and/or each of them may proceed to enforce
such provisions.
(b) Company Not to Make Payments with Respect to Subordinated
Indebtedness in Certain Circumstances.
(i) Upon the maturity of any Senior Indebtedness (including
interest thereon or fees or any other amounts owing in respect thereof),
whether at stated maturity, by acceleration or otherwise, all Obligations
owing in respect thereof, in each case to the extent due and owing, shall
first be paid in cash, before any payment (whether in cash, property
securities or otherwise) is made on account of the Subordinated
Indebtedness.
(ii) The Company may not, directly or indirectly, make any
payment with respect to any Subordinated Indebtedness and may not acquire
any Subordinated Indebtedness for cash or property while there exists any
default or event of default under the Credit Agreement or any other issue
of Senior Indebtedness that is then in existence.
(iii) In the event the Holder receives written notice that an
event of default exists with respect to any Senior Indebtedness (a "Notice
of Event of Default"), the Holder agrees not to accelerate the payment of
the obligations of the Company hereunder or bring any action with respect
thereto until the earlier of (a) receipt by the Holder of written notice
that such Event of Default has been cured, or (b) six (6) months following
the date of the Notice of Event of Default.
(iv) In the event that notwithstanding the provisions of the
preceding clauses (i) and (ii) of this Article One, the Company shall make
any payment on account of the Subordinated Indebtedness at a time when
payment is not permitted by said clause (i) or (ii), such payment shall be
held by the holder of this Subordinated Note, in trust for the benefit of,
and shall be paid forthwith over and delivered to, the holders of Senior
Indebtedness or their representative or the trustee under the indenture or
other agreement pursuant to which any instruments evidencing any Senior
Indebtedness may have been issued, as their respective interests may
appear, for application pro rata to the payment of all Senior Indebtedness
remaining unpaid to the extent necessary to pay all Senior Indebtedness in
full in accordance with the terms of Senior Indebtedness, after giving
effect to any concurrent payment or distribution to or for the holders of
such Senior Indebtedness. Without in any way modifying the provisions of
this Article One or affecting the subordination effected hereby if the
hereafter referenced notice is not given, the Company shall give the holder
of this Subordinated Note prompt written notice of any event which would
prevent payments under clause (i) or (ii) of this Section (b).
(c) Subordination to Prior Payment of All Senior Indebtedness on
Dissolution, Liquidation or Reorganization of Company. Upon any distribution of
assets of the Company upon dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise):
(i) the holders of all Senior Indebtedness shall first be
entitled to receive payment in full in cash of all Senior Indebtedness
(including, without limitation, post-petition interest at the rate provided
in the documentation with respect to the Senior Indebtedness, whether or
not such post-petition interest is an allowed claim against the debtor in
any bankruptcy or similar proceeding) before the holder of this
Subordinated Note is entitled to receive any payment of any kind or
character on account of the Subordinated Indebtedness;
(ii) any payment or distributions of assets of the Company of any
kind or character, whether in cash, property or securities to which the
holder of this Subordinated Note would be entitled except for the
provisions of this Article One, shall be paid by the liquidating trustee or
agent or other person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or other trustee
or agent, directing to the holders of Senior Indebtedness or their
representative or representatives, or the trustee or trustees under any
indenture under which any instruments evidencing any such Senior
Indebtedness may have been issued, to the extent necessary to make payment
in full in cash of all Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness; and
(iii) in the event that, notwithstanding the foregoing provision
of this Section (c), any payment or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, shall be
received by the holder of this Subordinated Note on account of Subordinated
Indebtedness before all Senior Indebtedness is paid in full in cash, such
payment or distribution shall be received and held in trust for and shall
be paid over to the holders of the Senior Indebtedness remaining unpaid or
unprovided for or their representative or representatives, or to the
trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued, for
application to the payment of such Senior Indebtedness until all such
Senior Indebtedness shall have been paid in full in cash, after giving
effect to any concurrent payment or distribution to the holders of such
Senior Indebtedness.
Without in any way modifying the provisions of this Article One or
affecting the subordination effected hereby if the hereafter referenced notice
is not given, the Company shall give prompt written notice to the holder of this
Subordinated Note of any dissolution, winding up, liquidation or reorganization
of the Company (whether in bankruptcy, insolvency or receivership proceedings or
upon assignment for the benefit of creditors or otherwise).
(d) Subrogation. Subject to the prior payment in full in cash of all
Senior Indebtedness, the holder of this Subordinated Note shall be subrogated to
the rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on this Subordinated Note shall be paid in full, and for
the purpose of such subrogation no payments or distributions to the holders of
the Senior Indebtedness by or on behalf of the Company or on behalf of the
holder of this Subordinated Note shall, as between the Company, its creditors
other than the holders of Senior Indebtedness, and the holder of this
Subordinated Note, be deemed to be payment by the Company to or on account of
the Senior Indebtedness, it being understood that the provisions of this Article
One are and are intended solely for the purpose of defining the relative rights
to the holder of this Subordinated Note, on the one hand, and the holders of the
Senior Indebtedness, on the other hand.
(e) Obligation of the Company Unconditional. Nothing contained in this
Article One or otherwise in this Subordinated Note is intended to or shall
impair, as between the Company and the holder of this Subordinated Note, the
obligation of the Company, which is absolute and unconditional, to pay to the
holder of this Subordinated Note the principal of and interest on this
Subordinated Note as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the holder of this Subordinated Note and creditors of the Company
other than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the holder of this Subordinated Note from exercising all
remedies otherwise permitted by applicable law upon an event of default under
this Subordinated Note, subject to the limitations, if any, under this Article
One or the rights of Holders to exercise rights and remedies, and subject to the
rights, if any, under Article One of the holders of Senior Indebtedness in
respect of cash, property, or securities of the Company received upon the
exercise of any such remedy. Upon any distribution of assets of the Company
referred to in this Article One, the holder of this Subordinated Note shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the holder of this
Subordinated Note, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article One.
(f) Subordination Rights Not Impaired by Acts or Omission of Company
or Holders of Senior Indebtedness. No right of any present and future holders of
any Senior Indebtedness to enforce subordination as herein provided shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act in good faith by any such
holders, or by any noncompliance by the Company with the terms and provisions of
this Subordinated Note, regardless of any knowledge thereof which any such
holder may have or be otherwise charged with. The holders of the Senior
Indebtedness may, without in any way affecting the obligations of the holder of
this Subordinated Note with respect hereto, at any time or from time to time and
in their absolute discretion, change the manner, place or terms of payment of,
change or extend the time of payment of, or renew or alter, any Senior
Indebtedness or amend, modify or supplement any agreement or instrument
governing or evidencing such Senior Indebtedness or any other document referred
to therein, or exercise or refrain from exercising any other of their rights
under the Senior Indebtedness including, without limitation, the waiver of
default thereunder and the release of any collateral securing such Senior
Indebtedness, all without notice to or assent from the holder of this
Subordinated Note.
(g) Definitions. For purposes of Article One of this Subordinated
Note, the following capitalized terms have the following meanings:
"Credit Agreement" means the Loan and Security Agreement (as amended,
modified, supplemented, extended, restated, refinanced, replaced or refunded
from time to time), originally dated as of June 14, 1997, by and between the
Company and its subsidiaries and First Union Commercial Corporation or its
affiliates and all other indebtedness due to First Union Commercial Corporation
or its affiliates, or any other bank or similar financial institution.
"Mezzanine Agreement" means the Senior Subordinated Loan Agreement (as
amended, modified, supplemented, extended, restated, refinanced, replaced or
refunded from time to time), dated as of January 28, 1999, by and between the
Company, Paribas Capital Funding LLC, Exeter Venture Lenders, L.P. Exeter
Capital Partners IV, L.P. and the other Lenders from time to time party thereto.
"Obligations" means any principal, interest, premium, penalties, fees,
expenses, indemnities and other liabilities and obligations (including any
guaranties of the foregoing liabilities and obligations) payable under the
documentation governing any Senior Indebtedness (including interest accruing
after the commencement of any bankruptcy, insolvency, receivership or similar
proceeding, whether or not such interest is an allowed claim against the debtor
in any such proceeding).
"Senior Indebtedness" means all Obligations (i) of the Company under,
or in respect of, the Credit Agreement and any guaranty thereunder, (ii) of the
Company under, or, in respect of, the Mezzanine Agreement and any guaranty
thereof and (iii) of the Company with respect to indebtedness for borrowed money
and any guaranty thereof which is due to a bank or other institutional lender or
which is outstanding as a result of any public offering or private placement of
debt securities arranged by a bank or financial institution. This Note shall be
pari passu with other subordinated notes issued in connection with business
acquisitions by the Company.
(h) In furtherance of this Subordination the Holder agrees to execute
and deliver any and all documents requested by the Company for delivery to
holders of its Senior Indebtedness (in the form as requested by such creditors)
in order to 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, and acting unanimously,
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 and such non-payment shall continue for a period of
ten (10) days after the date that written notice of non-payment has been
received by the Company; 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.
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.
Subject to the rights of holders of Senior Indebtedness, 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
MISCELLANEOUS
3.01 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.
3.02 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.
3.03 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.
3.04 Incorporation of Asset Purchase Agreement. This is one of the
Three Year Notes issued pursuant to the Asset Purchase Agreement dated this date
among the Company, the Holder and others, and is subject to set off and to the
other terms and conditions of such Asset Purchase Agreement.
3.05 Assignability. This Note shall be binding upon the Company, its
successors and assigns, and shall inure to the benefit of the Holder, its
successors and assigns. The Holder may assign its notes to its shareholders,
subject to Section 3.04.
3.06 Governing Law; Consent to Jurisdiction. This Note 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 Holder and the Company irrevocably submits to the non-exclusive jurisdiction
of the courts of the United States District Court for the District of New
Jersey, located in Essex County, New Jersey, for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Note and the
transactions contemplated hereby. Service of process in connection with any such
suit, action or proceeding may be served on each of the Holder and the Company
anywhere in the world by the same methods as are specified for the giving of
notices under this Note. Each of the Holder and the Company 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 of the Holder and the Company
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.
3.07 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:_____________________________________
Name:
Title:
[Seal]
EXHIBIT 99-1
Contact: Drew Kronick, Vice President Joel Pomerantz
Consolidated Delivery & Logistics, Inc. The Dilenschneider Group
(973) 471-1005 (212) 922-0900
CONSOLIDATED DELIVERY & LOGISTICS, INC. ACQUIRES
WESTWIND EXPRESS, INC.,
A LEADING CALIFORNIA-BASED DELIVERY COMPANY
Major Boost For CD&L's West Coast Market Share
CLIFTON, N.J., May 6, 1999 -- In a move to significantly increase its
market presence on the West Coast, Consolidated Delivery & Logistics, Inc.
(AMEX:CDV), one of the world's largest providers of customized, time-critical
air and ground delivery services, today announced it has acquired Westwind
Express, Inc. headquartered in Newbury Park, California. A leading West Coast
same-day delivery service, Westwind Express has operating branches in many key
California markets as well as in Missouri. Westwind, the Company's 24th
acquisition since CD&L was organized in late l995, generated approximately $7
million in annual revenues last year.
Current Westwind locations include Van Nuys, Ontario, Fresno,
Sacramento and Palmdale, California plus offices in Kansas City and Lexena,
Missouri. CD&L has
-more-
existing air and ground facilities in Los Angeles, San Francisco and Santa Rosa,
California as well as Seattle, Washington and Kansas City, Missouri.
CD&L Chairman and CEO Albert W. Van Ness Jr. commented: "This is an
important acquisition for CD&L as we continue to build out our national
strategy. It provides us with an increased market presence on the West Coast,
one of the nation's largest and busiest markets. Westwind brings exceptional
management, an excellent reputation, and a history of improving profitability.
It is a model of a superbly-run, forward-looking regional delivery company,
enjoying an excellent reputation for customer service."
William Brannan, CD&L President, noted that Steve Keihner, son of
Westwind's founder, James Keihner, and now president of the company, will become
CD&L's West Coast Regional Manager overseeing the combined CD&L and Westwind
businesses. He will be joined by former Westwind Director of Finance Teri
McMullin and Director of Operations Fred Tepstein.
Consolidated Delivery & Logistics, Inc. headquartered in Clifton, New
Jersey is a full-service, same-day ground and air delivery and logistics company
with 70 offices in 24 states and the District of Columbia. The Company utilizes
nearly 3,500 employees and utilizes over 1,400 independent contractors in
providing time sensitive delivery services to thousands of businesses. This
press release contains certain forward-looking statements regarding future
- -more- events of the Company. These forward-looking statements include comments
on the Company's future business development. 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 revenues and profits of the acquired company will decrease or fail to
improve over historical results, or that the Company's management group will be
unable to effectively and profitably integrate the acquired business or that
management of Westwind will be unable to effectively manage the larger combined
CD&L-Westwind West Coast operation or will be unable to maintain its level of
customer services or maintain its market presence or that the Company will be
unable to achieve its national strategy contemplated by the Company's business
management strategy or other risks specified in the Company's SEC filings.
