<PAGE>
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
Date of Report (Date of earliest event reported): August 23, 1996
AMERITRUCK DISTRIBUTION CORP.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
33-99716 75-2619368
(Commission File Number) (I.R.S. Employer Identification Number)
City Center Tower II, Suite 1101, 301 Commerce Street,
Fort Worth, Texas 76102-5384
(Address of principal executive offices) (Zip Code)
(817) 332-6020
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
------------------------------------
On August 23, 1996, AmeriTruck Distribution Corp. ("AmeriTruck")
purchased all of the outstanding stock of KTL, Inc., a Florida corporation
("KTL"), from Ronald N. Damico for a purchase price of $8,188,000 in cash and
225,000 shares of Class A common stock of AmeriTruck. As part of the
transaction, Mr. Damico and KTL entered into an employment agreement, under
which Mr. Damico was retained as KTL's President and Chief Executive Officer,
commencing August 23, 1996, at a salary of $150,000 per year. The term of the
employment agreement expires on November 15, 1998. In addition, KTL has agreed
to lease from Mr. Damico and his spouse certain real estate at Clearwater,
Florida, on a month-to-month basis, at a rental rate of $4,000 per month.
Further, KTL has agreed to lease the real estate at Largo, Florida used by KTL
as its corporate headquarters from a company owned by Mr. Damico, at a rental
rate of $16,000 per month, for a term ending February 23, 1998, at which time
KTL has agreed to purchase the property for a price to be determined at that
time. Future contingent consideration may be paid to Mr. Damico, in amounts to
be determined in the future, in connection with certain pending litigation and
retrospective rating adjustment refunds on policies of insurance in periods
prior to August 23, 1996.
The cash utilized to fund the transaction was provided in part by
NationsBank of Texas, N.A. pursuant to a line of credit established in February
1996 and in part by Volvo Truck Finance North America, Inc. pursuant to a line
of credit established in February 1996.
KTL is a trucking company founded in 1983 which specializes in the
truckload transportation of refrigerated commodities and less-than-truckload
shipments requiring expedited, timed-delivery services. KTL had revenues of
$23.6 million for the year ended December 31, 1995 and $6.3 million for the
three months ended March 31, 1996. KTL operates approximately 140 tractors and
300 trailers and employs approximately 300 persons, of whom 240 are drivers and
many of whom operate as two-driver teams.
KTL will be operated as a separate, wholly-owned subsidiary of
AmeriTruck.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) Financial Statements of Business Acquired
-----------------------------------------
Audited:
-------
Report of Independent Accountants
Balance Sheet at December 31, 1995
Statements of Income, Stockholders' Equity and Cash Flows for the Year
Ended December 31, 1995
Notes to Financial Statements
Unaudited:
---------
Interim Balance Sheet at March 31, 1996
Interim Statements of Income, Stockholders' Equity and Cash Flows for
the three months ended March 31, 1996
Notes to Interim Financial Statements
Note: It is currently impractical to provide unaudited financial
----
statements for KTL, Inc. for the six months ended June 30, 1996. These financial
statements will be filed as soon as they are available, but not later than
November 8, 1996.
<PAGE>
(b) Pro Forma Financial Information (Unaudited)
-------------------------------------------
It is currently impractical to provide the pro forma financial
information required by Article 11 of Regulation S-X. This pro forma financial
information will be filed as soon as it is available, but not later than
November 8, 1996.
(c) Exhibits
--------
Exhibit 2 Stock Purchase Agreement, dated as of August 23, 1996,
by and among AmeriTruck Distribution Corp., Ronald N.
Damico and Grand Hope Investments, Inc. together with
accompanying exhibits thereto.
<PAGE>
SIGNATURES
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 hereunto duly authorized.
AMERITRUCK DISTRIBUTION CORP.
By: /s/ Michael L. Lawrence
-----------------------
Michael L. Lawrence
Chairman of the Board
and Chief Executive Officer
By: /s/ Kenneth H. Evans, Jr.
-------------------------
Kenneth H. Evans, Jr.
Treasurer and Chief Financial and
Accounting Officer
Date: September 9, 1996
<PAGE>
KTL, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE(S)
<S> <C>
Report of Independent Accountants 1
Financial Statements:
Balance Sheet at December 31, 1995 2
Statement of Income for the Year Ended
December 31, 1995 3
Statement of Stockholders' Equity for the Year
Ended December 31, 1995 4
Statement of Cash Flows for the Year Ended
December 31, 1995 5
Notes to Financial Statements 6 - 14
</TABLE>
<PAGE>
[LETTER HEAD OF COOPERS & LYBRAND]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
KTL, Inc.
Largo, Florida
We have audited the accompanying balance sheet of KTL, Inc. as of December 31,
1995, and the related statements of income, stockholders' equity, and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of KTL, Inc. at December 31, 1995,
and the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Fort Worth, Texas
July 17, 1996
<PAGE>
KTL, INC.
BALANCE SHEET
DECEMBER 31, 1995
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Accounts receivable:
Trade, net of allowance for doubtful accounts of $60,030 $ 2,491,901
Other 29,159
Tires, tubes, parts and supplies 568,375
Prepaid expenses 394,159
------------
Total current assets 3,483,594
Property and equipment, net 15,282,204
------------
Total assets $ 18,765,798
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank overdraft payable $ 253,941
Current portion of long-term debt 4,662,264
Current portion of long-term debt - related parties 1,154,057
Accounts payable and accrued expenses 1,156,495
Insurance accruals 550,000
Income taxes payable 2,017
Deferred income taxes 13,880
------------
Total current liabilities 7,792,654
Long-term debt, less current portion 5,824,029
Long-term debt, less current portion - related parties 494,021
Deferred income taxes 20,821
------------
Total liabilities 14,131,525
------------
Commitments and contingencies (Note 7)
Stockholders' equity:
Common stock, $1 par value, 10,000 shares authorized,
915 shares issued and outstanding 915
Additional paid-in capital 145,195
Retained earnings 4,488,163
------------
Total stockholders' equity 4,634,273
------------
Total liabilities and stockholders' equity $ 18,765,798
============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL
STATEMENTS.
2
<PAGE>
KTL, INC.
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Operating revenue $ 23,550,407
------------
Operating expenses:
Operating supplies and expenses 7,066,379
Salaries and wages 6,926,766
Depreciation 2,670,775
Fringe benefits 1,434,852
Claims and insurance 1,285,894
Purchased transportation 934,965
Operating taxes and licenses 618,549
General supplies and expenses 283,018
Communication and utilities 280,072
Building and office equipment rents 241,493
Other, net 113,455
Provision for doubtful accounts 24,955
Gain on disposal of property and equipment (68,589)
------------
Total operating expenses 21,812,584
------------
Operating income 1,737,823
------------
Other income (expense):
Interest expense (898,379)
Interest income 26,893
------------
Total other income (expense) (871,486)
Income before provision for income taxes 866,337
Provision for income taxes 36,718
------------
Net income $ 829,619
============
Unaudited pro forma net income (Note 4) $ 256,208
============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL
STATEMENTS.
3
<PAGE>
KTL, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
for the year ended December 31, 1995
<TABLE>
<CAPTION>
COMMON ADDITIONAL TOTAL
SHARES COMMON PAID-IN RETAINED STOCKHOLDERS'
OUTSTANDING STOCK CAPITAL EARNINGS EQUITY
----------- --------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 915 $ 915 $ 145,195 $ 4,882,987 $ 5,029,097
Distributions to stockholder (1,224,443) (1,224,443)
Net income 829,619 829,619
----------- --------- ------------ ------------- ------------
Balance, December 31, 1995 915 $ 915 $ 145,195 $ 4,488,163 $ 4,634,273
=========== ========= ============ ============= ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4
<PAGE>
KTL, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income $ 829,619
Adjustments to reconcile net income to net cash
provided by operating activities:
Net gain on disposal of property and equipment (68,589)
Depreciation 2,670,775
Deferred income taxes 34,701
Provision for doubtful accounts 24,955
Changes in assets and liabilities:
Accounts receivable (290,155)
Tires, tubes, parts and supplies 213,105
Prepaid expenses (15,934)
Accounts payable and accrued expenses 171,123
Income taxes payable 2,017
------------
Net cash provided by operating activities 3,571,617
------------
Cash flows from investing activities:
Purchases of property and equipment (4,925,713)
Proceeds from disposal of property and equipment 725,728
Advances to related parties (684,794)
Collections from related parties 684,794
------------
Net cash used in investing activities (4,199,985)
------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 5,785,887
Principal repayments of long-term debt (4,115,659)
Distributions paid to stockholder (1,224,443)
Increase in bank overdraft payable 182,583
------------
Net cash provided by financing activities 628,368
------------
Net change in cash and cash equivalents 0
Cash and cash equivalents at beginning of year 0
------------
Cash and cash equivalents at end of year $ 0
============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 835,966
============
Supplemental schedule of noncash investing activities:
Book value of trades for property and equipment $ 1,551,939
============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<PAGE>
KTL, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
KTL, Inc. (the "Company") primarily transports refrigerated and non-
refrigerated products to wholesalers and retailers across the United
States. The Company provides its service on credit terms and generally
requires no collateral.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, cash in demand deposits and
short-term investments with original maturities of ninety days or less. The
Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company has not incurred losses in
such accounts. Cash equivalents are stated at cost, which approximates
market value.
TIRES, TUBES, PARTS AND SUPPLIES
Tires, tubes, parts and supplies are stated at the lower of cost (net of
accumulated amortization) (first-in, first-out) or market. In-service tires
are amortized over their estimated useful lives ranging from 10 to 18
months using the straight-line method.
PREPAID EXPENSES
Prepaid expenses include prepaid taxes (other than income), licenses,
insurance and rentals.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the property
and equipment as follows:
Tractors 3 - 4 years
Trailers 5 - 7 years
Building and improvements 7 - 30 years
Office furniture and equipment 3 - 7 years
Automobiles 3 - 5 years
Machinery and equipment 3 - 5 years
Major additions and betterments are capitalized, while maintenance and
repairs that do not improve or extend the life of the asset are charged to
expense as incurred. Gains and losses on dispositions are included in
operating income.
6
<PAGE>
KTL, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
PROPERTY AND EQUIPMENT, CONTINUED
Periodically, the Company exchanges property and equipment for similar
assets in nonmonetary transactions. Exchange losses are reflected in
current operations and exchange gains are deferred over the estimated
useful lives of the property and equipment. No exchange losses were
recognized for the year ended December 31, 1995.
INSURANCE ACCRUALS
Insurance accruals reflect the estimated costs of liabilities and claims
not covered by insurance. The liability for self-insurance is accrued on
claims incurred and on estimates of both unasserted and unsettled claims
which are assessed based on management's evaluation of the nature and
severity of individual claims and on the Company's past claims experience.
INCOME TAXES
The Company is organized as a subchapter S corporation for income tax
purposes and, accordingly, any income tax liabilities are the
responsibility of the stockholders with the exception of certain state
taxes, the liability for which has been recorded by the Company. The
Company's subchapter S corporation status will terminate on consummation of
an acquisition of the Company by a corporation. Unaudited pro forma income
tax information as if the Company had been organized as a subchapter C
corporation is presented in Note 4.
REVENUE RECOGNITION
Freight revenue is recognized upon the delivery of freight.
For the year ended December 31, 1995, the Company's largest customers were
Home Shopping Network, Lykes Brothers, Inc. and Staples Incorporated which
accounted for approximately 8 percent, 7 percent, and 6 percent of its
revenue, respectively. No other customers accounted for more than 5 percent
of the Company's revenue for 1995.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, trade accounts
receivable, accounts payable and accrued expenses reflected in the
financial statements approximate fair value due to the short-term maturity
of these instruments.
7
<PAGE>
KTL, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED
As the Company's effective interest rate approximates the estimated fair
market value interest rate, the fair value of the Company's long-term debt
at December 31, 1995 approximates its carrying value.
The Company is not an active participant in financial derivative
transactions.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the
financial statements and the reported amounts of revenues and expenses in
the reporting periods. Actual results could differ from those estimates.
2. PROPERTY AND EQUIPMENT:
Costs of property and equipment at December 31, 1995 are summarized as
follows:
<TABLE>
<S> <C>
Land $ 385,000
Tractors 9,897,654
Trailers 6,837,079
Building and improvements 1,271,067
Office furniture and equipment 308,406
Automobiles 101,048
Machinery and equipment 74,285
------------
18,874,539
Less accumulated depreciation 3,592,335
------------
$ 15,282,204
============
</TABLE>
8
<PAGE>
KTL, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. LONG-TERM DEBT:
Long-term debt consists of the following at December 31, 1995:
<TABLE>
<S> <C>
Obligations to finance company requiring monthly
payments through January 2000, with monthly
payments ranging from $369 to $15,943, including
interest ranging from 7.5% to 9.5%, collateralized
by revenue equipment. $ 10,441,289
Obligations to bank requiring monthly payments
through October 1998, with monthly payments
ranging from $367 to $385, including interest
at 9%, collateralized by automobiles. 45,004
------------
10,486,293
Less current portion 4,662,264
------------
$ 5,824,029
============
</TABLE>
Long-term debt - related parties consists of the following at December 31,
1995:
<TABLE>
<S> <C>
Obligation to stockholder, due on demand, requiring
monthly payments through June 2025, with monthly
payments of $7,318, including interest at 7%,
collateralized by land, building and improvements. $ 1,100,000
Obligations to related parties requiring monthly
payments through June 2001, with monthly
payments ranging from $148 to $2,064, including
interest ranging from 6.7% to 10%, uncollateralized. 548,078
------------
1,648,078
Less current portion 1,154,057
------------
$ 494,021
============
</TABLE>
The Company had a $250,000 line of credit for short-term financing issued
by First Union National Bank on which it had no outstanding borrowings as
of December 31, 1995.
9
<PAGE>
KTL, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. LONG-TERM DEBT, CONTINUED:
Annual maturities of long-term debt obligations are as follows:
<TABLE>
<S> <C>
1996 $ 5,816,321
1997 4,210,445
1998 1,497,993
1999 447,160
2000 104,631
Thereafter 57,821
------------
$ 12,134,371
============
</TABLE>
4. INCOME TAXES:
Income tax expense was as follows for the year ended December 31, 1995:
<TABLE>
<S> <C>
Current:
State $ 2,017
Deferred:
State 34,701
------------
Total $ 36,718
============
</TABLE>
Deferred taxes relate primarily to the effects of property and equipment.
UNAUDITED PRO FORMA INCOME TAX INFORMATION
The following unaudited pro forma tax information is presented in
accordance with SFAS No. 109 as if the Company had been a subchapter C
corporation subject to federal and state income taxes throughout the period
presented.
<TABLE>
<S> <C>
Income before provision for income taxes for
the year ended December 31, 1995 $ 866,337
Pro forma provision for income taxes as though
the Company was a subchapter C Corporation 610,129
------------
Pro forma net income $ 256,208
============
</TABLE>
10
<PAGE>
KLC, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. INCOME TAXES, CONTINUED:
A reconciliation of the federal statutory income tax rate to the pro forma
effective income tax rate is as follows:
<TABLE>
<S> <C>
Federal statutory income tax rate of 34% 34.00%
State income taxes, net of federal benefit 4.00
Nondeductible expenses 32.43
-------
Pro forma effective income tax rate 70.43%
=======
</TABLE>
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:
Accounts payable and accrued expenses consists of the following at December
31, 1995:
<TABLE>
<S> <C>
Accounts payable - trade $ 195,260
Payroll and owner operator pay 143,809
Taxes other than income taxes 575,965
Other 241,461
-----------
$ 1,156,495
===========
</TABLE>
6. EMPLOYEE BENEFIT PLAN:
The Company has a contributory profit sharing plan covering all employees
who meet certain eligibility requirements. Under the plan, the Company
contributes amounts determined at the discretion of the Board of Directors
which may not exceed maximum amounts established by the Internal Revenue
Code. The Company did not make any contributions for the year ended
December 31, 1995.
7. COMMITMENTS AND CONTINGENCIES:
SELF-INSURANCE AND LITIGATION
The Company is self-insured with respect to collision and liability
exposure related to claims which exceed its insurance coverages. The
Company retains all collision and cargo claim risk above its maximum
insurance coverage of $1,000,000 and retains liability risk up to its
deductible for liability coverage.
11
<PAGE>
KTL, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
7. COMMITMENTS AND CONTINGENCIES, CONTINUED:
SELF-INSURANCE AND LITIGATION, CONTINUED
The Company is a defendant in legal proceedings incidental to its business,
primarily involving claims for personal injury or property damages incurred
in the transportation of freight. It is the opinion of management and
counsel that the probable exposure to the Company in connection with these
proceedings is approximately $550,000 with a reasonable possibility that
the Company could be required to pay an additional $700,000. The Company
has recorded $550,000 as insurance accruals as of December 31, 1995.
Under the requirements of the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 and certain other laws, the Company
is potentially liable for the cost of clean-up of various contaminated
sites identified by the U. S. Environmental Protection Agency and other
agencies. Currently, the Company has not been notified that it has been
named as a potentially responsible party at any sites. Therefore, it is
impossible to estimate the costs associated with such potential
liabilities, if any.
Subsequent to December 31, 1995, the Company became involved in
environmental improvement activities at one of its facilities. Because of
the uncertainty associated with the environmental assessments performed to
date and possible future remediation activities that may occur, the actual
future costs related to these matters cannot be determined. It is the
opinion of management that the estimated range of the reasonably possible
environmental cleanup costs associated with this facility is between
$20,000 and $150,000.
OTHER
The Company is also a defendant in other legal proceedings considered to be
in the normal course of business and none of which, singularly or
collectively, except as noted above, management considers to be material to
the Company.
12
<PAGE>
KTL, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
7. COMMITMENTS AND CONTINGENCIES, CONTINUED:
LEASES
The Company leases various buildings and equipment under noncancelable
operating leases with terms in excess of one year. The Company has also
entered into numerous lease agreements with terms that are less than one
year, including leases with a related party (see Note 8). As of December
31, 1995, future minimum rental payments required under these operating
leases with an initial term in excess of one year are summarized as
follows:
<TABLE>
<S> <C>
1996 $ 17,592
1997 14,792
1998 14,792
1999 11,094
-----------
Total $ 58,270
===========
</TABLE>
Total rental expense for all operating leases was $266,150 for the year
ended December 31, 1995.
LETTERS OF CREDIT
As of December 31, 1995, the Company had two outstanding letters of credit
totaling $300,000. These letters of credit were issued to Comdata
Corporation and EDS Fleet Services, Inc. in conjunction with driver
expenses and advances.
8. RELATED PARTY TRANSACTIONS:
The Company provides short-term financing to a related party through notes
receivable. The outstanding balance generally does not exceed $30,000 and
is repaid within one month. During the year ended December 31, 1995, the
Company advanced and collected $684,794 through such transactions and did
not receive any interest on these noninterest bearing advances.
Debt to related parties represents amounts due for revenue equipment
purchased in 1994, and an amount due to a stockholder of the Company for
certain land and a building purchased in 1995 (see Note 3).
The Company leases certain land and buildings on a month-to-month basis
from a related party controlled principally by a stockholder of the
Company. Rental expense related to these leases was $81,000 for the year
ended December 31, 1995. The lease commitments of the Company are subject
to change at the mutual discretion of the Company and the related party.
13
<PAGE>
KTL, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
9. SUBSEQUENT EVENT:
The Company and its stockholders are negotiating a Stock Purchase Agreement
with AmeriTruck Distribution Corporation ("AmeriTruck") and plan to enter
into a number of related transactions pursuant to which AmeriTruck will
acquire all the outstanding common stock of the Company in exchange for
cash and shares of AmeriTruck common stock.
14
<PAGE>
KTL, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE(S)
<S> <C>
Financial Statements:
Interim Balance Sheet at March 31, 1996 1
Interim Statement of Income for the Three Months Ended
March 31, 1996 2
Interim Statement of Stockholders' Equity for the Three
Months Ended March 31, 1996 3
Interim Statement of Cash Flows for the Three Months
Ended March 31, 1996 4
Notes to Interim Financial Statements 5 - 6
</TABLE>
<PAGE>
KTL, INC.
INTERIM BALANCE SHEET
MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents $ 219,310
Accounts receivable:
Trade 2,169,418
Other 39,713
Tires, tubes, parts and supplies 791,343
Prepaid expenses 300,853
------------
Total current assets 3,520,637
Property and equipment, net 15,324,408
------------
Total assets $ 18,845,045
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 4,833,111
Current portion of long-term debt - related parties 1,188,189
Accounts payable and accrued expenses 1,041,945
Insurance accruals 550,000
Income taxes payable 3,294
Deferred income taxes 22,669
------------
Total current liabilities 7,639,208
Long-term debt, less current portion 5,521,876
Long-term debt, less current portion - related parties 498,978
Deferred income taxes 34,005
------------
Total liabilities 13,694,067
------------
Commitments and contingencies (Note 7)
Stockholders' equity:
Common stock, $1 par value, 10,000 shares authorized,
915 shares issued and outstanding 915
Additional paid-in capital 145,195
Retained earnings 5,004,868
------------
Total stockholders' equity 5,150,978
------------
Total liabilities and stockholders' equity $ 18,845,045
============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
1
<PAGE>
KTL, INC.
INTERIM STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Operating revenue $ 6,287,211
-------------
Operating expenses:
Operating supplies and expenses 1,902,589
Salaries and wages 1,691,970
Depreciation 645,939
Fringe benefits 457,989
Claims and insurance 259,105
Purchased transportation 236,995
Operating taxes and licenses 141,297
General supplies and expenses 65,274
Communication and utilities 79,487
Building and office equipment rents 26,983
Other, net (20,831)
Provision for doubtful accounts 2,300
Gain on disposal of property and equipment (40,702)
-------------
Total operating expenses 5,448,395
-------------
Operating income 838,816
-------------
Other income (expense):
Interest expense (302,095)
Interest income 3,234
-------------
Total other income (expense) (298,861)
-------------
Income before provision for income taxes 539,955
Provision for income taxes 23,250
-------------
Net income $ 516,705
=============
Unaudited pro forma net income $ 262,802
=============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
2
<PAGE>
KTL, INC.
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON ADDITIONAL TOTAL
SHARES COMMON PAID-IN RETAINED STOCKHOLDERS'
OUTSTANDING STOCK CAPITAL EARNINGS EQUITY
----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995 915 $ 915 $ 145,195 $ 4,488,163 $ 4,634,273
Net income 516,705 516,705
----------- ----------- ------------- ------------ -------------
Balance, March 31, 1996 915 $ 915 $ 145,195 $ 5,004,868 $ 5,150,978
=========== =========== ============= ============ =============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
<PAGE>
KTL, INC.
INTERIM STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income $ 516,705
Adjustments to reconcile net income to
net cash provided by operating activities:
Net gain on disposal of property and equipment (40,702)
Depreciation 645,939
Deferred income taxes 21,973
Provision for doubtful accounts 2,300
Changes in assets and liabilities:
Accounts receivable 309,629
Tires, tubes, parts and supplies (222,968)
Prepaid expenses 93,306
Accounts payable and accrued expenses (114,550)
Income taxes payable 1,277
------------
Net cash provided by operating activities 1,212,909
------------
Cash flows from investing activities:
Purchases of property and equipment (723,941)
Proceeds from disposal of property and equipment 81,500
Advances to related parties (181,100)
Collections from related parties 181,100
------------
Net cash used in investing activities (642,441)
------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt 900,019
Principal repayments of long-term debt (997,236)
Decrease in bank overdraft payable (253,941)
------------
Net cash used in financing activities (351,158)
------------
Net change in cash and cash equivalents 219,310
Cash and cash equivalents at beginning of year 0
------------
Cash and cash equivalents at end of year $ 219,310
============
Supplemental disclosure of cash flow information:
Cash paid for interest $ 241,133
============
Supplemental schedule of noncash investing activities:
Book value of trades for property and equipment $ 322,688
============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4
<PAGE>
KTL, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES:
The December 31, 1995 financial statements for KTL, Inc. (the "Company")
include a summary of significant accounting policies and should be read in
conjunction with these unaudited interim condensed financial statements.
The statements for the period presented are condensed and do not contain
all information required by generally accepted accounting principles to be
included in a full set of financial statements. In the opinion of
management, the accompanying unaudited interim condensed financial
statements reflect all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position of the
Company as of March 31, 1996, and the results of operations and cash flows
for the three-month period ended March 31, 1996. The results of operations
for any interim period are not necessarily indicative of the results of
operations to be expected for the entire year.
2. BUSINESS ORGANIZATION:
The Company and its stockholders are negotiating a Stock Purchase Agreement
with AmeriTruck Distribution Corporation ("AmeriTruck") and plan to enter
into a number of related transactions pursuant to which AmeriTruck will
acquire all the outstanding common stock of the Company in exchange for
cash and shares of AmeriTruck common stock.
3. UNAUDITED PRO FORMA INCOME TAX INFORMATION:
The following unaudited pro forma tax information is presented in
accordance with SFAS No. 109 as if the Company had been a subchapter C
corporation subject to federal and state income taxes throughout the period
presented.
<TABLE>
<S> <C>
Income before provision for income taxes for the
three months ended March 31, 1996 $ 539,955
Pro forma provision for income taxes as though
the Company was a subchapter C Corporation 277,153
----------
Pro forma net income $ 262,802
==========
</TABLE>
5
<PAGE>
KTL, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS, CONTINUED
3. UNAUDITED PRO FORMA INCOME TAX INFORMATION, CONTINUED:
A reconciliation of the federal statutory income tax rate to the pro forma
effective income tax rate is as follows:
<TABLE>
<S> <C>
Federal statutory income tax rate of 34% 34.00 %
State income taxes, net of federal benefit 4.00
Nondeductible expenses 13.33
------
Pro forma effect in income tax rate 51.33 %
======
</TABLE>
6
<PAGE>
EXHIBIT INDEX
-------------
Number Exhibit
- ------ -------
2 Stock Purchase Agreement, dated as of August 23, 1996, by and among
AmeriTruck Distribution Corp., Ronald N. Damico and Grand Hope
Investments, Inc., together with accompanying exhibits thereto.
<PAGE>
EXHIBIT 2
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT is dated as of the 23rd day of August, 1996
by and among AMERITRUCK DISTRIBUTION CORP., a Delaware corporation (the
"Buyer"), and RONALD N. DAMICO, an individual resident of Pinellas County,
-----
Florida (the "Seller"), and GRAND HOPE INVESTMENTS, INC., a Florida corporation
------
("Grand Hope").
----------
WHEREAS, the Seller is the owner of all of the issued and outstanding
shares of the capital stock (the "KTL Stock") of KTL, INC., a Florida
---------
corporation (the "Company"); and
-------
WHEREAS, the Seller desires to sell the KTL Stock to the Buyer and the
Buyer desires to purchase the KTL Stock from the Seller, upon the terms and
subject to the conditions contained in this Agreement;
WHEREAS, the Seller is the sole owner of all of the issued and outstanding
shares of the common stock of Grand Hope, which owns certain real estate
currently leased to the Company; and
WHEREAS, Grand Hope desires to enter into a new lease with the Company for
such real estate, and the Buyer desires for the Company to enter into a new
lease with Grand Hope for such real estate, upon the terms and subject to the
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, the parties hereto agree as follows:
1. PURCHASE AND SALE OF KTL STOCK.
1.1. Purchase and Sale. Subject to the terms and conditions set forth in
-----------------
this Agreement, the Seller agrees to sell to the Buyer, and the Buyer agrees to
purchase from the Seller, at the Closing (as defined in Section 3 of this
Agreement), all of the outstanding shares of the KTL Stock, in exchange for the
payment of the aggregate Stock Purchase Price (as defined below).
1.2. Delivery of Purchase Price. The Buyer shall pay to the Seller, as
--------------------------
the aggregate purchase price for the KTL Stock, (a) $8,118,000, in cash (the
"Cash Portion"), plus (b) 225,000 shares of Class A Common Stock, par value $.01
------------
per share, of the Buyer (the "Buyer's Stock" and, collectively, the "Stock
------------- -----
Purchase
- --------
<PAGE>
-2-
Price"). As noted in Section 13.15, the Buyer and the Seller have increased the
- -----
Cash Portion to compensate the Seller for the passage of time.
1.3. Future Contingent Consideration. (a) To the extent that any of the
-------------------------------
liabilities arising out of motor vehicle accidents which occurred in the course
of the business of the Company prior to Closing are, subsequent to the Closing,
settled, paid or otherwise closed for an aggregate amount less than the amount,
if any, recorded on the balance sheet included in the Interim Financials (as
defined in Section 4.8) as an accrued liability for such accident (the "Recorded
--------
Liability"), the Buyer shall pay to the Seller as additional consideration for
- ---------
the KTL Stock, in cash within 30 days following said settlement, payment or
closure, the difference between (A) the actual amount paid in connection with
such settlement, payment or closure and (B) the Recorded Liability. If the
amount paid in connection with such settlement, payment or closure is greater
than the Recorded Liability, if any, for the related motor vehicle accident, no
payment will be due the Seller with respect thereto pursuant to this Section 1.3
and such settlement, payment or closure shall be subject to the Seller's
indemnity pursuant to Section 12.1(iii).
(b) In addition to any payments to be made pursuant to paragraph
(a) above, Buyer shall pay to Seller, in cash as additional consideration for
the KTL Stock, an amount equal to any refund of worker compensation insurance
premiums actually received by the Company or credited to the Company's account,
from policies of insurance in effect at any time prior to the Closing, to the
extent said refund, if any, relates to experience and premiums paid in time
periods prior to Closing (an "Insurance Refund"). Upon the request of the Seller
--------- ------
at any time before or after Closing, the Buyer shall execute or cause the
Company to execute such documents as the Seller deems appropriate to effect an
assignment of any Insurance Refund from the Company to the Seller, so that the
Seller may receive such Insurance Refund directly from the applicable insurer.
(c) With respect to $550,000 of the accrual for liability on the
balance sheet included in the Interim Financials (as defined in Section 4.8) for
the litigation pending in Delaware, more fully described in item number 2 of
Schedule 4.10 hereto, until such time as this case is settled, paid or otherwise
- -------- ----
closed (the "Closure Date") the Company will pay to the Seller an interest
------- ----
payment on the amount of such accrual, accruing at a rate of 6.25% per annum
from the date of this Agreement to the Closure Date, payable monthly in arrears
on the first day of each month.
(d) In order to address the defense of any claims arising out of
motor vehicle accidents occurring prior to the Closing, at the Closing the
Seller and the Buyer will enter into an Agreement Concerning Procedure For
Settlements and Satisfaction of Litigation, in the form of Exhibit A hereto (the
---------
"Settlement Agreement").
--------------------
<PAGE>
-3-
1.4. Section 338(h)(10) Election. Buyer and Seller shall make an
---------------------------
election pursuant to Section 338(h)(10) of the Internal Revenue Code of 1986, as
amended (the "Code"), and under any analogous state tax laws, electing to treat
----
the purchase of the KTL Stock as an asset acquisition for tax and accounting
purposes. Buyer and Seller shall at Closing, and thereafter as may be reasonably
required by Buyer, execute such forms and documents as may be required to
effectively make a Section 338(h)(10) election under the Code and under any
analogous state tax laws. Seller specifically acknowledges that there could be
adverse federal and state tax consequences to Seller as a result of making a
Section 338(h)(10) election. The Seller also acknowledges that the Stock
Purchase Price has been negotiated with such possible consequences considered
and adequately compensates Seller for such adverse consequences, if any.
2. LEASE OF THE REAL ESTATE.
2.1. Largo Lease. Subject to the terms and conditions set forth in this
-----------
Agreement, Grand Hope agrees to lease to the Company, and the Seller agrees to
cause the Company to lease from Grand Hope, that certain real estate consisting
of a parcel situated at 1501 Lake Avenue, S.E., Largo, Florida, more
particularly described in Schedule 2.1 hereof (the "Largo Real Estate"),
------------ ----- ---- ------
pursuant to a Lease Agreement in the form of Exhibit B hereto (the "Largo
------- - -----
Lease").
- -----
3. CLOSING.
3.1. Time and Place. The closing of the sale and purchase of the KTL
--------------
Stock (the "Closing") shall be held at the offices of the Company at 1501 Lake
-------
Avenue, S.E., Largo, Florida, simultaneously with the execution and delivery of
this Agreement, or at such other place as the Buyer and the Seller may agree.
The date on which the Closing is actually held hereunder is sometimes referred
to herein as the "Closing Date".
------- ----
3.2. Transactions at Closing. At the Closing, in addition to any other
-----------------------
instruments or documents referred to herein:
(a) The Seller shall deliver to the Buyer, free and clear of any
lien, claim or encumbrance, certificates representing the KTL Stock, duly
endorsed in blank or with duly executed stock powers attached.
(b) The Buyer shall deliver to the Seller the Buyer's Stock
referred to in Section 1.2 hereof.
(c) The Buyer shall deliver $8,118,000 as the Cash Portion to the
Seller by certified or bank check or by wire transfer.
<PAGE>
-4-
(d) Each of the persons listed on Schedule 8.8 hereto shall execute
------------
and deliver an Employment and Non-Competition Agreement (as defined in Section
8.8).
(e) Immediately prior to the Closing, the Seller and his spouse,
Sandra C. Damico, and the Company shall enter into an amendment (the "NJ
--
Amendment") of that certain mortgage note, dated June 27, 1995 (the "NJ Note"),
- --------- -- ----
and the related Mortgage, dated June 27, 1995 (the "NJ Mortgage"), concerning
-- --------
real property owned by the Company in Cherry Hill, New Jersey (the "New Jersey
--- ------
Real Estate"), described on Schedule 3.2(e) hereto. The NJ Amendment shall be
- ---- ------ -------- ------
in the form of Exhibit C hereto.
------- -
(f) Each of the Buyer and the Seller shall enter into an Instrument
of Accession to Stockholders' Agreement and an Instrument of Accession to
Registration Rights Agreement, in the form of Exhibit D hereto.
---------
(g) Grand Hope and the Company shall enter into the Largo Lease.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Buyer as follows:
4.1. Organization of the Company; Authority. The Company is a
--------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. The Company is duly qualified and in good standing as a
foreign corporation in all jurisdictions in which the character of the
properties owned or leased or the nature of the activities conducted by it makes
such qualification necessary. The Seller has delivered to the Buyer complete and
correct copies of the Company's Articles of Incorporation and By-Laws and all
amendments thereto. The Company has all requisite power and authority to own or
lease and operate its properties and to carry on its business as such business
is now conducted. The Board of Directors of the Company has approved and
recommended the consummation of the transactions contemplated by this Agreement.
4.2. Right to Sell Outstanding Shares, Approvals; Binding Effect. The
-----------------------------------------------------------
Seller has all requisite power and full legal right to enter into this Agreement
and the Employment and Non-Competition Agreement to which he is individually a
party, to perform all of his agreements and obligations thereunder, each in
accordance with its respective terms, and to sell to the Buyer all of the
outstanding shares of KTL Stock. This Agreement has been duly executed by the
Seller and constitutes, and the Employment and Non-Competition Agreement to
which he is individually to be a party at the Closing will have been duly
executed and delivered by the Seller and will constitute, the legal, valid and
binding obligation of the Seller enforceable against him in accordance with its
terms, except as the enforceability thereof may be limited by any applicable
bankruptcy, reorganization, insolvency or other laws affecting creditors' rights
generally or by general principles of equity.
<PAGE>
-5-
4.3. Subsidiaries. The Company does not have any Subsidiaries (as
------------
defined in Section 11 hereafter) and does not own or hold of record and/or
beneficially any shares of any class in the capital of any corporations. The
Company does not own any legal and/or beneficial interests in any partnerships,
limited liability companies, business trusts or joint ventures or in any other
unincorporated trade or business enterprises.
4.4. Capitalization. The authorized capital of the Company consists of
--------------
10,000 shares of common stock, par value $1.00 per share, 915 shares of which
are issued and outstanding on the date hereof. All of the shares of KTL Stock
are owned of record and beneficially by the Seller. All of the KTL Stock will
be sold by the Seller to the Buyer pursuant hereto and is validly issued and
outstanding, fully paid and non-assessable. There are no commitments for the
purchase or sale of, and no options, warrants or other rights to subscribe for
or purchase, any securities of the Company or any securities or other rights
convertible into or exercisable for securities of the Company. The Seller
specifically, but not by way of limitation of the foregoing, represents and
warrants that each of the individuals listed on Schedule 4.4 hereto, each of
------------
whom is listed on the Seller's federal income tax return for the year 1995 as a
stockholder of the Company, has had any and all rights as a stockholder redeemed
by the Company, each has knowingly waived any and all rights as a stockholder of
the Company and has no claim to any equity in the Company.
4.5. Title to Stock, Liens, etc. The Seller has, and as of the
--------------------------
consummation of the Closing the Buyer will have, sole record and beneficial
ownership of all of the KTL Stock, free and clear of any mortgage, lien, pledge,
charge, security interest, encumbrance, title retention agreement, option,
equity or other adverse claim thereto.
4.6. Non-Contravention. The execution and delivery of this Agreement and
-----------------
the Employment and Non-Competition Agreement to which the Seller is individually
a party and the consummation by the Seller of the transactions contemplated
hereby and thereby will not (a) violate or conflict with any provision of the
Articles of Incorporation or By-Laws of the Company, each as amended to date; or
(b) constitute a violation of, or be in conflict with, or constitute or create a
default under, or result in the creation or imposition of any encumbrance upon
any property of the Company or the Seller pursuant to (i) any agreement or
instrument to which the Company or the Seller is a party or by which any of its
or the Seller's properties is bound, or (ii) any statute, judgment, decree,
order, regulation or rule of any court or governmental or regulatory authority.
4.7. Governmental Consents; Transferability of Licenses, Etc. No
-------------------------------------------------------
consent, approval or authorization of, or registration, qualification or filing
with, any governmental agency or authority is required for the execution and
delivery by the Seller of this Agreement or the Employment Agreement and Non-
Competition Agreements to which the Seller is a party or for the consummation by
the Seller of the
<PAGE>
-6-
transactions contemplated hereby or thereby. The Company has and maintains, and
the permits listed on Schedule 4.7 hereto include, all licenses, permits and
------------
other authorizations from all governmental authorities (collectively, the
"Permits") as are necessary or desirable for the conduct of all material
-------
portions of the Company's business. None of the Permits will terminate or
otherwise be adversely affected as a result of the consummation of the
transactions contemplated by this Agreement, and true and complete copies of
such Permits have previously been delivered to the Buyer.
4.8. Financial Statements. The Seller has delivered the following
--------------------
financial statements (the "Financial Statements") to the Buyer, and there are
--------------------
attached as Schedule 4.8 hereto: (a) the balance sheet of the Company as of
------------
December 31, 1995, and the related statements of income, retained earnings and
cash flows of the Company for the year ended December 31, 1995 and (b) a balance
sheet of the Company at March 31, 1996 and the related statements of income,
retained earnings and cash flows of the Company for the three months then ended
(the "Interim Financials"). Each of the Financial Statements are true and
------------------
correct in all material respects, and have been prepared in accordance with
generally accepted accounting principles (subject, in the case of the Interim
Financials, to the absence of footnotes and to year-end audit adjustments
consisting only of routine year-end accruals); each of such balance sheets
fairly and accurately presents in all material respects the financial condition
of the Company as of its respective date; and such statements of income,
retained earnings and cash flows fairly and accurately present in all material
respects the results of operations, retained earnings and cash flows for the
periods covered thereby.
4.9. Absence of Certain Changes. Except as set forth on Schedule 4.9,
-------------------------- ------------
since March 31, 1996, the Company has carried on its business only in the
ordinary course, and there has not been (a) any change in the assets,
liabilities, sales, income or business of the Company or in its relationships
with suppliers, customers or lessors, other than changes which were both in the
ordinary course of business and have not been, either in any case or in the
aggregate, materially adverse; (b) any acquisition or disposition by the Company
of any material asset or property other than in the ordinary course of business;
(c) any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting, either in any case or in the aggregate, the
property or business of the Company; (d) any declaration, setting aside or
payment of any dividend or any other distributions in respect of the KTL Stock;
(e) any issuance of any additional shares of the capital stock of the Company or
any direct or indirect redemption, purchase or other acquisition of any of the
KTL Stock, (f) any material increase in the compensation, pension or other
benefits payable or to become payable by the Company to any of its officers or
employees, or any bonus payments or arrangements made to or with any of them
(other than pursuant to the terms of any existing written agreement or plan
attached hereto as part of Schedule 4.9); (g) any forgiveness or cancellation of
------------
any debt or claim by the Company or any waiver of any right of material value
other than compromises of accounts receivable in the ordinary course of
business; (h) any entry by the Company
<PAGE>
-7-
into any transaction other than in the ordinary course of business; (i) any
incurrence by the Company of any obligations or liabilities, whether absolute,
accrued, contingent or otherwise (including, without limitation, liabilities as
guarantor or otherwise with respect to obligations of others), other than
obligations and liabilities incurred in the ordinary course of business; (j) any
mortgage, pledge, lien, lease, security interest or other charge or encumbrance
on any of the assets, tangible or intangible, of the Company, other than in the
ordinary course of business; or (k) any discharge or satisfaction by the Company
of any lien or encumbrance or payment by the Company of any obligation or
liability (fixed or contingent) other than (A) current liabilities included in
the Financial Statements and (B) current liabilities incurred since the date of
the Financial Statements in the ordinary course of business.
4.10. Litigation, Etc. Except as set forth on Schedule 4.10 hereto, no
--------------- -------------
action, suit, proceeding or investigation is pending or threatened against the
Company (nor is there any basis therefor known to the Seller) of a material
nature, and, except as set forth in Schedule 4.10, an adequate accrual exists on
-------------
the balance sheet included in the Interim Financials for all matters set forth
on Schedule 4.10.
-------------
4.11. Conformity to Law. To the Seller's knowledge, the Company has
-----------------
complied in all material respects with, and is in material compliance with (a)
all laws, statutes, governmental regulations and all judicial or administrative
tribunal orders, judgments, writs, injunctions, decrees or similar commands
applicable to the Company or any of its properties (including, without
limitation, any labor, environmental, occupational health, zoning or other law,
regulation or ordinance) and (b) all unwaived terms and provisions of all
contracts, agreements and indentures to which the Company is a party, or by
which the Company or any of its properties is subject. To the Seller's
knowledge, the Company has not committed, been charged with, or been under
investigation with respect to, nor does there exist, any material violation of
any provision of any federal, state or local law or administrative regulation in
respect of the Company or any of its properties.
4.12. Title to Property, Real Property Leases, etc. (a) Except as set
--------------------------------------------
forth on Schedule 4.12 and Schedule 4.12(a) hereto, the Company has good and
------------- ----------------
marketable title to all of its properties and assets, including, without
limitation, all those reflected in the balance sheet included in the Interim
Financials (except for properties or assets sold or otherwise disposed of in the
ordinary course of business since March 31, 1996), all free and clear of all
liens, pledges, charges, security interests, encumbrances or title retention
agreements of any kind or nature. All such properties and assets are, to the
Seller's knowledge, in good condition and repair and are adequate and sufficient
to carry on the business of the Company as presently conducted. Neither the
Seller nor the Company has received any notice that either the whole or any
portion of any real property leased by the Company (the "Leased Real Property")
--------------------
is to be condemned, requisitioned or otherwise taken by any public authority.
Neither the Seller nor the Company has any knowledge of any public improvements
that may result in special assessments against or otherwise affect any of
<PAGE>
-8-
the Leased Real Property. Schedule 4.12(b) hereto sets forth a complete and
----------------
correct description of all leases of Leased Real Property to which the Company
is a party. Complete and correct copies of all such leases have been delivered
to the Buyer, except with respect to the Largo Real Estate, which is a verbal
agreement accurately described in Schedule 4.12(b). Each such lease, other than
----------------
the verbal agreement concerning the Largo Real Estate, is valid and subsisting
and no event or condition exists which constitutes, or after notice or lapse of
time or both would constitute, a default thereunder. Except for the supersession
by the Largo Lease of the existing arrangements with respect to the Largo Real
Estate, none of such leases or agreements will terminate or otherwise be
adversely affected as a result of the consummation of the transactions
contemplated by this Agreement. The leasehold interests of the Company are
subject to no lien or other encumbrance, and the Company is in quiet possession
of the properties covered by such leases.
(b) Except for the Largo Real Estate and the Company's warehouse
facility in Clearwater, Florida (the "Clearwater Real Estate"), no asset used in
----------------------
the business of the Company is owned by the Seller or his spouse or any of their
relatives or any corporation, partnership, limited liability company or other
entity in which any of them has an interest.
4.13. Real Property; Safety, Zoning and Environmental Matters.
-------------------------------------------------------
(a) Schedule 4.13 hereto sets forth complete and accurate legal
-------------
descriptions of all real property owned or leased by the Company. Except as set
forth on Schedule 4.13 hereto, the Company has good and marketable title to the
-------------
New Jersey Real Estate, which except as set forth on Schedule 4.13 is free and
-------------
clear of all liens, pledges, charges, security interests, encumbrances or title
retention agreements of any kind or nature. The New Jersey Real Estate is in
good condition and repair and is adequate and sufficient to carry on the
business of the Company as presently conducted. There are no material defects
in any improvements to the New Jersey Real Estate, as to title or condition, not
described on Schedule 4.13. Neither the Company nor the Seller has received any
-------------
notice that either the whole or any portion of the New Jersey Real Estate is to
be condemned, requisitioned or otherwise taken by any public authority, and
neither the Company nor the Seller has any knowledge of any public improvements
that may result in special assessments against or otherwise affect any of the
New Jersey Real Estate. There are no leases of the New Jersey Real Estate. The
Seller and his spouse are the record and beneficial holders of the NJ Mortgage
and the NJ Note. The Seller has previously delivered to the Buyer true and
correct copies of the NJ Mortgage and the NJ Note. The principal amount
outstanding on the NJ Note is $1,100,000.
(b) Except as set forth on Schedule 4.13(b), to the Seller's
----------------
knowledge:
<PAGE>
-9-
(i) neither the Company nor any operator of any real
property presently or formerly owned, leased or operated by the Company is in
violation or alleged violation of any judgment, decree, order, law, license,
rule or regulation pertaining to environmental matters, including without
limitation those arising under the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and Liability
----
Act of 1980 as amended ("CERCLA"), the Superfund Amendments and Reauthorization
------
Act of 1986 ("SARA"), the Federal Water Pollution Control Act, the Solid Waste
----
Disposal Act, as amended, the Federal Clean Water Act, the Federal Clean Air
Act, the Toxic Substances Control Act, or any state or local statute,
regulation, ordinance, order or decree relating to health, safety or the
environment (hereinafter "Environmental Laws");
------------------
(ii) neither the Seller nor the Company has received notice
from any third party, including without limitation any federal, state or local
governmental authority, (A) that the Company or any predecessor in interest has
been identified by the United States Environmental Protection Agency ("EPA") as
---
a potentially responsible party under CERCLA with respect to a site listed on
the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986); (B) that any
hazardous waste, as defined by 42 U.S.C. (S)6903(5), any hazardous substance as
defined by 42 U.S.C. (S)9601(14), any pollutant or contaminant as defined by 42
U.S.C. (S)9601(33) or any toxic substance, oil or hazardous material or other
chemical or substance regulated by any Environmental Laws ("Hazardous
---------
Substances") which the Company or any predecessor in interest has generated,
- ----------
transported or disposed of has been found at any site at which a federal, state
or local agency or other third party has conducted or has ordered that the
Company or any predecessor in interest conduct a remedial investigation, removal
or other response action pursuant to any Environmental Law; or (C) that the
Company or any predecessor in interest is or shall be a named party to any
claim, action, cause of action, complaint, (contingent or otherwise) legal or
administrative proceeding arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with the
release of Hazardous Substances; and
(iii) (A) no portion of any real property presently or
formerly owned, leased or operated by the Company has been used for the
handling, manufacturing, processing, storage or disposal of Hazardous Substances
except in accordance with applicable Environmental Laws; and, except as listed
on Schedule 4.13(b), no underground tank or other underground storage receptacle
----------------
for Hazardous Substances is located on any properties now used by the Company;
(B) in the course of any activities conducted by the Company or operators of any
real property presently or formerly owned, leased or operated by the Company, no
Hazardous Substances have been generated by the Company except in accordance
with applicable Environmental Laws; (C) all real properties presently or
formerly owned, leased or operated by the Company are free from material
contamination of every kind caused by the Company, including without limitation,
groundwater, surface
<PAGE>
-10-
water, soil, sediment and air contamination, and such properties do not contain
asbestos in any form, urea formaldehyde foam insulation, transformers or other
equipment containing polychlorinated biphenyls or any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by any
Environmental Law, or which poses a hazard to the health and safety of the
occupants of such properties or those adjacent thereto and for which the Company
is responsible; (D) the Company has not caused any material releases (i.e., any
- -
past or present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, disposing or dumping) or threatened
releases of Hazardous Substances on, upon, into or from any real property
presently or formerly owned, leased or operated by the Company except in
accordance with applicable Environmental Laws; (E) there have been no releases
on, upon, from or into any real property in the vicinity of any real property
presently or formerly owned, leased or operated by the Company which, through
soil or groundwater contamination, may have come to be located on such real
property; and (F) in addition, any Hazardous Substances that have been generated
on any real property presently or formerly owned, leased or operated by the
Company have been transported offsite only by carriers having identification
numbers issued by the EPA and have been treated or disposed of only by treatment
or disposal facilities maintaining valid permits as required under applicable
Environmental Laws, which transporters and facilities have been and are, to the
best of the Seller's knowledge, operating in compliance with such permits and
applicable Environmental Laws.
(c) Attached as part of Schedule 4.13(c) is a list of all
----------------
document reports, site assessments, data, communications or other materials, in
the Company's or the Seller's possession or to which either the Company or the
Seller has access, which contain any material information with respect to
potential environmental liabilities associated with any real property presently
or formerly owned, leased or operated by the Company and relating to compliance
with Environmental Laws or the environmental condition of such properties and
adjacent properties. The Seller has furnished to the Buyer complete and accurate
copies of all of the documents, reports, site assessments, data, communications
and other materials listed on Schedule 4.13(c) hereto.
----------------
4.14. Insurance. Schedule 4.14 hereto lists all policies of fire,
--------- -------------
liability, workmen's compensation, life, property and casualty and other
insurance owned or held by the Company. To the knowledge of the Seller, such
policies of insurance are maintained with financially sound and reputable
insurance companies, funds or underwriters and are of the kinds and cover such
risks and are in such amounts and with such deductibles and exclusions as are
consistent with prudent business practice. To the knowledge of the Seller, all
such policies (a) are in full force and effect, (b) are sufficient for
compliance by the Company with all requirements of law and all agreements to
which the Company is a party, (c) provide that they will remain in full force
and effect through the respective dates set forth in such Schedule and (d) will
not in any way be affected by, or terminate or lapse by reason of, the
transactions
<PAGE>
-11-
contemplated by this Agreement. The Company is not in default with
respect to its obligations under any of such insurance policies and has not
received any notification of cancellation of any such insurance policies. Since
January 1, 1995, except as set forth on Schedule 4.14 no insurer has denied or
-------------
contested coverage under any such policies.
4.15. Material Contracts. To the knowledge of the Seller, Schedule 4.15
------------------ -------------
sets forth a complete and accurate list of all material contracts to which the
Company is a party or by which it or any of its assets or properties is bound or
subject, except (a) contracts entered into in the ordinary course of business
after the date hereof and prior to the Closing, which will be identified to the
Buyer in writing prior to the Closing, (b) contracts terminable by the Company
upon 30 days' notice or less without the payment of any termination fee or
penalty, and (c) contracts listed in other Schedules hereto. As used in this
Section 4.15, the word "material contract" means and includes every agreement or
-----------------
understanding of any kind, written or oral, which is legally enforceable by or
against the Company, which comes within any of the following categories: (a)
contracts and other agreements with any current or former officer, director,
employee, consultant or shareholder or any partnership, corporation, joint
venture or any other entity in which any such person has an interest; (b)
agreements with any labor union or association representing any employee; (c)
contracts and other agreements for the provision of services by the Company and
involving the payment by or to the Company of more than $5,000; (d) bonds or
other security agreements provided by any party in connection with the business
of the Company; (e) contracts and other agreements for the sale of any of the
Company's assets or properties other than in the ordinary course of business or
for the grant to any person of any preferential rights to purchase any of the
Company's assets or properties; (f) joint venture agreements relating to the
assets, properties or business of the Company or by or to which it or any of its
assets or properties are bound or subject; (g) contracts or other agreements
under which the Company agrees to indemnify any party, to share tax liability of
any party, or to refrain from competing with any party; (h) any contracts or
other agreements with regard to Indebtedness (as defined in Section 11); or (i)
any other contract or other agreement involving the payment by or to the Company
of more than $5,000, whether or not made in the ordinary course of business. The
Seller has delivered to the Buyer or made available to the Buyer true, correct
and complete copies of all such contracts, together with all modifications and
supplements thereto. Each of the contracts listed on Schedule
--------
4.15 hereto or any of the other Schedules hereto is in full force and effect,
- ----
the Company is not in breach of any of the provisions of any such contract, nor,
to the knowledge of the Seller or the Company, is any other party to any such
contract in default thereunder, nor does any event or condition exist which with
notice or the passage of time or both would constitute a default thereunder. The
Company has in all material respects performed all obligations required to be
performed by it to date under each such contract. No approval or consent of any
person is needed in order that the contracts listed on Schedule 4.15 and
-------------
other Schedules hereto continue in full force and effect following the
consummation of the transactions contemplated by this
<PAGE>
-12-
Agreement, and no such contract includes any provision the effect of which may
be to enlarge or accelerate any obligations of the Company thereunder or give
additional rights to any other party thereto or will in any other way be
affected by, or terminate or lapse by reason of, the transactions contemplated
by this Agreement.
4.16. Employment of Officers, Employees. Schedule 4.16 sets forth the
---------------------------------- -------------
name and current annual salary and other compensation payable by the Company to
each exempt non-hourly employee.
4.17. Employee Benefit Plans. (a) Except for the arrangements set forth
----------------------
on Schedule 4.17(a), the Company does not now maintain or contribute to, and has
----------------
not in the current or preceding six (6) calendar years maintained or contributed
to, any pension, profit-sharing, deferred compensation, bonus, stock option,
share appreciation right, severance, group or individual health, dental,
medical, life insurance, survivor benefit, or similar plan, policy or
arrangement, whether formal or informal, for the benefit of any director,
officer, consultant or employee, whether active or terminated, of the Company.
Each of the arrangements set forth on Schedule 4.17(a) is hereinafter referred
----------------
to as an "Employee Benefit Plan", except that any such arrangement which is a
---------------------
multi-employer plan shall be treated as an Employee Benefit Plan only for
purposes of Sections 4.17(d)(iv), (vi) and (viii) and 4.17(g) below.
(b) The Seller has heretofore delivered to Buyer a true, correct
and complete copy of the Employee Benefit Plan of the Company described as item
1 in Schedule 4.17(a), and with respect to such Employee Benefit Plan (i) any
----------------
associated trust, custodial, insurance or service agreements, (ii) any annual
report, actuarial report, or disclosure materials (including specifically any
summary plan descriptions) submitted to any governmental agency or distributed
to participants or beneficiaries thereunder in the current or any of the six (6)
preceding calendar years and (iii) the most recently received IRS determination
letters and any governmental advisory opinions or rulings.
(c) Each Employee Benefit Plan is and has heretofore been
maintained and operated in compliance with the terms of such Employee Benefit
Plan and with the requirements prescribed (whether as a matter of substantive
law or as necessary to secure favorable tax treatment) by any and all statutes,
governmental or court orders, or governmental rules or regulations in effect
from time to time, including but not limited to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the Code, and applicable to such
-----
Employee Benefit Plan. Each Employee Benefit Plan which is intended to qualify
under Section 401(a) of the Code has been determined to be so qualified by the
IRS and nothing has occurred since the date of the last such determination which
has resulted or is likely to result in the revocation of such determination.
(d) Except as set forth on Schedule 4.17(d),
-----------------
<PAGE>
-13-
(i) there is no pending or threatened legal action,
proceeding or investigation, other than routine claims for benefits, concerning
any Employee Benefit Plan or to the best knowledge of the Seller and the Company
any fiduciary or service provider thereof and, to the best knowledge of the
Seller and the Company, there is no basis for any such legal action or
proceeding;
(ii) no liability (contingent or otherwise) to the Pension
Benefit Guaranty Corporation ("PBGC") or any multi-employer plan has been
----
incurred by the Company or any affiliate thereof (other than insurance premiums
satisfied in due course);
(iii) no reportable event, or event or condition which
presents a material risk of termination by the PBGC, has occurred with respect
to any Employee Benefit Plan, or any retirement plan of an affiliate of the
Company, which is subject to Title IV of ERISA;
(iv) no Employee Benefit Plan nor any party in interest with
respect thereof, has engaged in a prohibited transaction which could subject the
Company directly or indirectly to liability under Section 409 or 502(i) of ERISA
or Section 4975 of the Code;
(v) no communication, report or disclosure has been made
which, at the time made, did not accurately reflect the terms and operations of
any Employee Benefit Plan;
(vi) no Employee Benefit Plan provides welfare benefits
subsequent to termination of employment to employees or their beneficiaries
(except to the extent required by applicable state insurance laws and Title I,
Part 6 of ERISA);
(vii) no benefits due under any Employee Benefit Plan have
been forfeited subject to the possibility of reinstatement (which possibility
would still exist at or after Closing); and
(viii) the Company has not undertaken to maintain any Employee
Benefit Plan for any period of time and each such Plan is terminable at the sole
discretion of the sponsor thereof, subject only to such constraints as may be
imposed by applicable law.
(e) With respect to each Employee Benefit Plan for which a separate
fund of assets is or is required to be maintained, full payment has been made
of, or adequate accrual has been made on the Balance Sheet included in the
Interim Financials for, all amounts that the Company is required, under the
terms of each such Plan, to have paid as contributions to that Employee Benefit
Plan as of the
<PAGE>
-14-
end of the most recently ended plan year of that Employee Benefit Plan, and no
accumulated funding deficiency (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, exists with respect to any such
Employee Benefit Plan. The current value of the assets of each such Employee
Benefit Plan, as of the end of the most recently ended plan year of that
Employee Benefit Plan, exceeded the current value of all accrued benefits under
that Employee Benefit Plan.
(f) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment (whether of
severance pay or otherwise) becoming due from any Employee Benefit Plan to any
current or former director, officer, consultant or employee of the Company or
result in the vesting, acceleration of payment or increases in the amount of any
benefit payable to or in respect of any such current or former director,
officer, consultant or employee.
(g) No Employee Benefit Plan is a multi-employer plan.
(h) For purposes of this Section 4.17, "multi-employer plan",
"party in interest", "current value", "accrued benefit", "reportable event" and
"benefit liability" have the same meaning assigned such terms under Sections 3,
4043(b) or 4001(a) of ERISA, and "affiliate" means any entity which under
Section 414 of the Code is treated as a single employer with the Company.
4.18. Labor Relations. To the best knowledge of the Seller, the Company
---------------
is in full compliance with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages and hours and
nondiscrimination in employment, and is not engaged in any unfair labor
practice. There is no charge pending or threatened against the Company alleging
unlawful discrimination in employment practices before any court or agency and
there is no charge of or proceeding with regard to any unfair labor practice
against the Company pending before the National Labor Relations Board. There is
no labor strike, dispute, slow-down or work stoppage actually pending or
threatened against or involving the Company. No one has petitioned within the
last five (5) years, and no one is now petitioning, for union representation of
any of the Company's employees. No grievance or arbitration proceeding arising
out of or under any collective bargaining agreement is pending against the
Company and no claim therefor has been asserted. None of the employees of the
Company is covered by any collective bargaining agreement, and no collective
bargaining agreement is currently being negotiated by the Company. The Company
has not experienced any work stoppage during the last five years.
4.19. Potential Conflicts of Interest. Except as set forth on Schedule
------------------------------- --------
4.19, no officer, director or stockholder of the Company or their spouses or any
- ----
of their siblings, children or their spouses (a) owns, directly or indirectly,
any interest in (excepting not more than 1% stock holdings for investment
purposes in securities of publicly held and traded companies) or is an officer,
director, employee or consultant
<PAGE>
-15-
of any Person (as defined in Article 11) which is a competitor, lessor, lessee,
customer or supplier of the Company; (b) owns, directly or indirectly, in whole
or in part, any tangible or intangible property which the Company is using or
the use of which is necessary for the business of the Company; or (c) has any
cause of action or other claim whatsoever against, or owes any amount to, the
Company, except for claims in the ordinary course of business, such as for
accrued vacation pay, accrued benefits under Employee Benefit Plans and similar
matters and agreements.
4.20. Trademarks, Patents, Etc. Schedule 4.20 hereto sets forth a
------------------------ -------------
complete and accurate list of (a) all patents, trademarks, trade names and
copyrights registered in the name of the Company or used or proposed to be used
by the Company, all applications therefor, and all licenses (as licensee or
licensor) and other agreements relating thereto, and (b) all written agreements
relating to other technology, know-how and processes which the Company is
licensed or authorized by others to use or which the Company has licensed or
authorized for use by others. Except to the extent set forth in Schedule 4.20,
-------------
the Company owns or has the sole and exclusive right to use all patents,
trademarks, trade names and copyrights, and has the right without restrictions
to use all technology, know-how and processes, used or necessary for the
ordinary course of business as presently conducted or proposed to be conducted,
and the consummation of the transactions contemplated hereby will not alter or
impair any such right. No claims have been asserted, and no claims are pending,
by any person regarding the use of any such patents, trademarks, trade names,
copyrights, technology, know-how or processes, or challenging or questioning the
validity or effectiveness of any license or agreement, and there is no basis for
such claim. To the knowledge of the Seller and the Company, the use by the
Company of such patents, trademarks, trade names, copyrights, technology, know-
how or processes in the ordinary course of business does not infringe on the
rights of any person.
4.21. Suppliers and Customers. Schedule 4.21 hereto sets forth the
----------------------- -------------
twenty-five (25) largest customers of the Company for the six months ended June
30, 1996. The relationships of the Company with such customers and its material
suppliers are good commercial working relationships and, except as set forth on
Schedule 4.21, no supplier or customer of material importance to the Company has
- -------------
cancelled or otherwise terminated, or threatened to cancel or otherwise to
terminate, its relationship with the Company or has during the last twelve (12)
months decreased materially, or threatened to decrease or limit materially, its
services, supplies or materials for use by the Company or its usage or purchase
of the services or products of the Company except for normal cyclical changes
related to customers' businesses. Neither the Seller nor the Company has any
knowledge that any such supplier or customer intends to cancel or otherwise
substantially modify its relationship with the Company or to decrease materially
or limit its services, supplies or materials to the Company, or its usage or
purchase of the Company's services or products, and to the knowledge of the
Seller and the Company, the communication of the transactions contemplated
hereby will not adversely affect the relationship of the Company with any such
supplier or customer.
<PAGE>
-16-
4.22. Accounts Receivable. All accounts and notes receivable reflected on
--------------------
the balance sheet included in the Interim Financials, and all accounts and notes
receivable arising subsequent to March 31, 1996, have arisen in the ordinary
course of business, represent valid obligations owing to the Company and, to the
best of Seller's knowledge, none are impaired.
4.23. No Undisclosed Liabilities. Except to the extent (a) reflected or
--------------------------
reserved against in the balance sheet included in the Interim Financials, (b)
incurred in the ordinary course of business after March 31, 1996 or (c)
described on any Schedule hereto, the Company has no material liabilities or
obligations of any nature, whether accrued, absolute, contingent or otherwise
(including without limitation as guarantor or otherwise with respect to
obligations of others), other than performance obligations with respect to the
Company's contracts that would not be required to be reflected or reserved
against on a balance sheet prepared in accordance with generally accepted
accounting principles or in the footnotes thereto.
4.24. Conduct of Business. Since March 31, 1996, the Company has
-------------------
conducted its business in material compliance with the provisions of Section 7
hereof, as if each of those provisions applied to the conduct of such businesses
at all times since such date.
4.25. Taxes. Except as set forth on Schedule 4.25, the Company has duly
----- -------------
filed with the appropriate government agencies all of the income, sales, use,
employment and other material tax returns and material reports required to be
filed by it. No waiver of any statute of limitations relating to taxes has been
executed or given by the Company. Except as set forth on Schedule 4.25, all
-------------
material taxes, assessments, fees and other governmental charges upon the
Company or upon any of its properties, assets, revenues, income and franchises
which are owed by the Company with respect to any period ending on or before the
Closing Date have been paid, other than those currently payable without penalty
or interest for which a reserve exists on the balance sheet included in the
Interim Financials. The Company has withheld and paid all taxes required to be
withheld or paid in connection with amounts paid or owing to any employee,
creditor, independent contractor or third party. No federal tax return of the
Company is currently under audit by the IRS (as defined in Section 11), and,
except as set forth on Schedule 4.25, no other tax return of the Company is
-------------
currently under audit by any other taxing authority. Neither the IRS nor, except
as set forth on Schedule 4.25, any other taxing authority is now asserting or
-------------
threatening to assert against the Company any deficiency or claim for additional
taxes or interest thereon or penalties in connection therewith or any adjustment
that would have an adverse effect on the Company.
4.26. Indebtedness. Except as disclosed on Schedule 4.26 hereto, the
------------ -------------
Company is not in default in any material respects with respect to any
outstanding Indebtedness or any instrument relating thereto and no such
Indebtedness or any
<PAGE>
-17-
instrument or agreement relating thereto purports to limit the issuance of any
securities by the Company or the operation of the business of the Company.
Complete and correct copies of all instruments (including all amendments,
supplements, waivers and consents) relating to any Indebtedness of the Company
have been furnished to the Buyer.
4.27. Bank Accounts, Signing Authority, Powers of Attorney. Except as set
----------------------------------------------------
forth on Schedule 4.27 hereto, the Company has no account or safe deposit box in
-------------
any bank and no Person has any power, whether singly or jointly, to sign any
checks on behalf of the Company to withdraw any money or other property from any
bank, brokerage or other account of the Company or to act under any power of
attorney granted by the Company at any time for any purpose. Schedule 4.27 also
-------------
sets forth the names of all persons authorized to borrow money or sign notes on
behalf of the Company.
4.28. Inventory. The inventory and supplies of the Company are adequate
---------
for present needs, and are in usable and saleable condition in the ordinary
course of business, subject only to appropriate reserves for obsolescence
reflected in the balance sheet included in the Interim Financials.
4.29. Minute Books. The minute books and other records of the Company
------------
made available to the Buyer for inspection accurately record therein all actions
taken by the Company's Board of Directors and shareholders. The stock records
of the Company made available to the Buyer for inspection accurately record
thereon all issuances and transfers of shares of the Company's capital stock.
4.30. Investment Representations. The Seller is acquiring the Buyer's
--------------------------
Stock for the purpose of investment and not with a view to distribution or
resale thereof. The acquisition by the Seller of the Buyer's Stock shall
constitute a confirmation of this representation. The Seller further represents
that he has been furnished access to the business records of the Buyer and to
such additional information and documents as he requested and has been afforded
an opportunity to ask questions of and receive answers from representatives of
the Buyer concerning the business and prospects of the Buyer and the issuance of
the Buyer's Stock pursuant to this Agreement. The Seller further represents that
he understands and agrees that until registered under the Securities Act of
1933, as amended, or transferred pursuant to the provisions of Rule 144
thereunder, or any similar provision as promulgated by the Securities and
Exchange Commission, all certificates evidencing any of the Buyer's Stock,
whether upon initial issuance or upon any transfer thereof, shall bear a legend,
prominently stamped or printed thereon, reading substantially as follows:
"The securities represented hereby have not been registered under the
Securities Act of 1933 or applicable state securities laws. These
securities have been acquired for investment and not with a view to
distribution or resale, and may not be mortgaged, pledged, hypothecated or
<PAGE>
-18-
otherwise transferred without an effective registration statement for such
securities under the Securities Act of 1933 or applicable state securities
laws, or an opinion of counsel reasonably satisfactory to the Issuer that
registration is not required under such Act or applicable state securities
laws."
4.31. Broker. The Seller has not retained, utilized or been represented by
------
any broker, agent, finder or intermediary in connection with the negotiation or
consummation of the transactions contemplated by this Agreement.
4.32. Disclosure. No representation or warranty by the Seller in this
----------
Agreement or in any exhibit, schedule, written statement, certificate or other
document delivered or to be delivered to the Buyer pursuant hereto or in
connection with the consummation of the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact required to be stated therein or necessary to
make the statements contained therein not misleading or necessary in order to
provide the Buyer with proper and complete information as to the business,
condition, operations and prospects of the Company. There is no fact which the
Seller has not disclosed to the Buyer in writing which materially adversely
affects, or so far as the Seller can now foresee will materially adversely
affect, the business or condition (financial or other) of the Company or the
ability of the Seller to perform this Agreement or any of the transactions
contemplated hereby.
5. REPRESENTATIONS AND WARRANTIES OF GRAND HOPE AND THE SELLER. Grand
Hope and the Seller, jointly and severally, represent and warrant to the Buyer
as follows:
5.1. Organization of the Grand Hope; Authority. Grand Hope is a
------------------------------- ---------
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida; is duly qualified and in good standing as a foreign
corporation in all jurisdictions in which the character of the properties owned
or leased or the nature of the activities conducted by it makes such
qualification necessary; and has delivered to the Buyer complete and correct
copies of Grand Hope's Articles of Incorporation and By-Laws and all amendments
thereto. Grand Hope has all requisite power and authority to own or lease and
operate its properties and to carry on its business as such business is now
conducted.
5.2. Right to Lease Real Estate, Approvals; Binding Effect. Grand Hope
------------------------------------- --------------
has all requisite power and full legal right to enter into this Agreement, to
perform all of the agreements and obligations hereunder and to enter into the
Largo Lease. This Agreement has been duly executed by Grand Hope and
constitutes, and the Largo Lease, when executed and delivered by Grand Hope will
have been duly executed and delivered and will constitute, the legal, valid and
binding obligations of Grand Hope, enforceable against Grand Hope in accordance
with their terms, except as the enforceability thereof may be limited by any
applicable bankruptcy, reorganization,
<PAGE>
-19-
insolvency or other laws affecting creditors' rights generally or by general
principles of equity.
5.3. Subsidiaries. Grand Hope does not have any Subsidiaries (as defined
------------
in Section 11) and does not own or hold of record and/or beneficially any
shares of any class in the capital of any corporations. Grand Hope does not own
any legal and/or beneficial interests in any partnerships, business trusts or
joint ventures or in any other unincorporated trade or business enterprises.
5.4. Non-Contravention. The execution and delivery of this Agreement and
-----------------
the other documents contemplated hereby to which Grand Hope is a party, and the
consummation by Grand Hope of the transactions contemplated hereby and thereby
will not (a) violate or conflict with any provision of the Articles of
Incorporation or By-Laws of Grand Hope, each as amended to date; or (b)
constitute a violation of, or be in conflict with, or constitute or create a
default under, or result in the creation or imposition of any encumbrance upon
any property of Grand Hope or its stockholders pursuant to (i) any agreement or
instrument to which Grand Hope or its stockholders is a party or by which any of
its or its stockholders' properties is bound, or (ii) any statute, judgment,
decree, order, regulation or rule of any court or governmental or regulatory
authority.
5.5. Governmental Consents; Transferability of Licenses, Etc. To the
-------------------------------------------------------
best knowledge of the Seller, no consent, approval or authorization of, or
registration, qualification or filing with, any governmental agency or authority
is required for the execution and delivery by Grand Hope of this Agreement and
the other documents contemplated hereby to which Grand Hope is a party, or for
the consummation by Grand Hope of the transactions contemplated hereby or
thereby. Grand Hope has and maintains all licenses, permits and other
authorizations from all governmental authorities (collectively, the "Real Estate
-----------
Permits") as are necessary or desirable for the ownership of the Largo Real
- -------
Estate or the operation of the activities currently conducted on the Largo Real
Estate. All of the Real Estate Permits are transferable to the Buyer, and true
and complete copies of such Real Estate Permits have previously been delivered
to the Buyer.
5.6. Litigation, Etc. To the best knowledge of the Seller, no action,
---------------
suit, proceeding or investigation is pending or threatened against Grand Hope
(nor is there any basis therefor known to Grand Hope or the Seller).
5.7. Conformity to Law. To the best knowledge of the Seller, Grand Hope
-----------------
has in all material respects complied with, and is in material compliance with,
all laws, statutes, governmental regulations and all judicial or administrative
tribunal orders, judgments, writs, injunctions, decrees or similar commands
applicable to Real Estate (including, without limitation, any labor,
environmental, occupational health, zoning or other law, regulation or
ordinance). To the best knowledge of the Seller, Grand Hope has not committed,
been charged with, or been under investigation with respect
<PAGE>
-20-
to, nor does there exist, any material violation of any provision of any
federal, state or local law or administrative regulation in respect of the Largo
Real Estate.
5.8. Title to Largo Real Estate. Grand Hope has good and marketable
--------------------------
title to the Largo Real Estate, which is all free and clear of all liens,
pledges, charges, security interests, encumbrances or title retention agreements
of any kind or nature. The Largo Real Estate is in good condition and repair and
is adequate and sufficient to carry on the business of the Company as presently
conducted. There are no material defects in any improvements to the Largo Real
Estate, as to title or condition. Neither Grand Hope nor the Seller has received
any notice that either the whole or any portion of the Largo Real Estate is to
be condemned, requisitioned or otherwise taken by any public authority, and
neither Grand Hope nor the Seller has any knowledge of any public improvements
that may result in special assessments against or otherwise affect any of the
Largo Real Estate. There are no leases of the Largo Real Estate other than the
lease to the Company described in Schedule 4.12(a) (the "Existing Lease").
---------------- -------- -----
<PAGE>
-21-
5.9. Safety, Zoning and Environmental Matters.
----------------------------------------
(a) Except as set forth on Schedule 5.9, to the Seller's knowledge:
------------
(i) Grand Hope is not in material violation or alleged
material violation of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without limitation
those arising under any Environmental Laws;
(ii) Grand Hope has not received notice from any third party,
including without limitation any federal, state or local governmental authority,
(A) that Grand Hope or any predecessor in interest has been identified by the
EPA as a potentially responsible party under CERCLA with respect to a site
listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B (1986);
(B) that any Hazardous Substances which Grand Hope or any predecessor in
interest has generated, transported or disposed of has been found at any site at
which a federal, state or local agency or other third party has conducted or has
ordered that the Company or any predecessor in interest conduct a remedial
investigation, removal or other response action pursuant to any Environmental
Law; or (C) that Grand Hope or any predecessor in interest is or shall be a
named party to any claim, action, cause of action, complaint, (contingent or
otherwise) legal or administrative proceeding arising out of any third party's
incurrence of costs, expenses, losses or damages of any kind whatsoever in
connection with the release of Hazardous Substances; and
(iii) (A) no portion of the Largo Real Estate has been used
for the handling, manufacturing, processing, storage or disposal of Hazardous
Substances except in accordance with applicable Environmental Laws; and except
as set forth on Schedule 4.13(b), no underground tank or other underground
----------------
storage receptacle for Hazardous Substances is located on such property; (B) in
the course of any activities conducted by Grand Hope, the Company or any other
operators, no Hazardous Substances have been generated or are being used on the
Largo Real Estate except in accordance with applicable Environmental Laws; (C)
the Largo Real Estate is free from material contamination of every kind caused
by the Company or Grand Hope, including without limitation, groundwater, surface
water, soil, sediment and air contamination, and the Largo Real Estate does not
contain asbestos in any form, urea formaldehyde foam insulation, transformers or
other equipment containing polychlorinated biphenyls or any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any Environmental Law, or which poses a hazard to the health and safety of the
occupants of such properties or those adjacent thereto and for which the Company
or Grand Hope is responsible; (D) neither the Company nor Grand Hope has caused
any releases by the Company or Grand Hope (i.e., any past or present releasing,
----
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, disposing or dumping) or threatened releases of Hazardous Substances
on, upon, into or from the Largo Real Estate except in accordance with
applicable Environmental Laws; (E) there have been no releases
<PAGE>
-22-
on, upon, from or into any real property in the vicinity of any the Largo Real
Estate, which, through soil or groundwater contamination, may have come to be
located on the Largo Real Estate; and (F) in addition, any Hazardous Substances
that have been generated on the Largo Real Estate, have been transported offsite
only by carriers having identification numbers issued by the EPA and have been
treated or disposed of only by treatment or disposal facilities maintaining
valid permits as required under applicable Environmental Laws, which
transporters and facilities have been and are, to the best knowledge of Grand
Hope and the Seller, operating in compliance with such permits and applicable
Environmental Laws.
(b) Attached as part of Schedule 4.13(c) is a list of all
----------------
documents, reports, site assessments, data, communications or other materials,
in Grand Hope's or the Seller's possession or to which it or they have access,
which contain any material information with respect to potential environmental
liabilities associated with the Largo Real Estate and relating to compliance
with Environmental Laws or the environmental condition of the Largo Real Estate
and adjacent properties. Grand Hope has furnished to the Buyer complete and
accurate copies of all of the documents, reports, site assessments, data,
communications and other materials listed on Schedule 4.13(c) hereto.
----------------
5.10. Taxes. Grand Hope has duly filed with the appropriate government
-----
agencies all of the tax returns and material reports required to be filed by it
as to the Largo Real Estate. No waiver of any statute of limitations relating to
such taxes has been executed or given by Grand Hope.
5.11. Broker. Grand Hope has not retained, utilized or been represented
-------
by any broker, agent, finder or intermediary in connection with the negotiation
or consummation of the transactions contemplated by this Agreement in connection
with the Largo Real Estate.
6. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
and warrants to each of the Seller and Grand Hope as follows:
6.1. Organization of Buyer; Authority. The Buyer is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of the State of
Delaware. The Buyer has all requisite power and authority to execute and deliver
this Agreement and all other agreements referred to herein to be executed by the
Buyer, including without limitation the Employment and Non-Competition
Agreements (collectively, the "Buyer Agreements"), and to carry out
----------------
all of the actions required of it pursuant to the terms hereof and thereof.
6.2. Corporate Approval; Binding Effect. The Buyer has obtained all
------------------ --------------
necessary authorizations and approvals from its Board of Directors and
stockholders required for the execution and delivery of this Agreement and the
other Buyer Agreements and the consummation of the transactions contemplated
hereby and
<PAGE>
-23-
thereby. This Agreement has been duly executed and delivered by the Buyer and
constitutes, and the other Buyer Agreements when executed and delivered by the
Buyer will have been duly executed and delivered and will constitute, the legal,
valid and binding obligations of the Buyer, enforceable against the Buyer in
accordance with their terms, except as enforceability thereof may be limited by
any applicable bankruptcy, reorganization, insolvency or other laws affecting
creditors' rights generally or by general principles of equity.
6.3. Non-Contravention. The execution and delivery by the Buyer of this
-----------------
Agreement and the other Buyer Agreements and the consummation by the Buyer of
the transactions contemplated hereby and thereby will not (a) violate or
conflict with any provisions of the Certificate of Incorporation or By-Laws of
the Buyer, each as amended to date; or (b) constitute a violation of, or be in
conflict with, constitute or create a default under, or result in the creation
or imposition of any lien upon any property of the Buyer pursuant to (i) any
agreement or instrument to which the Buyer is a party or by which the Buyer or
any of its properties is bound or to which the Buyer or any of its properties is
subject, or (ii) any statute, judgment, decree, order, regulation or rule of any
court or governmental authority to which the Buyer is subject.
6.4. Governmental Consents. No consent, approval or authorization of, or
---------------------
registration, qualification or filing with, any governmental agency or authority
is required for the execution and delivery by the Buyer of this Agreement and
the other Buyer Agreements or for the consummation by the Buyer of the
transactions contemplated hereby or thereby.
6.5. Issuance of the Buyer's Stock. The Buyer has obtained all necessary
-----------------------------
authorizations and approvals required for the issuance and delivery of the
Buyer's Stock. As of the date hereof, the authorized, issued and outstanding
capital stock of the Buyer is set forth on Schedule 6.5 hereto. Such shares of
------------
capital stock are held of record as set forth on Schedule 6.5. When issued in
------------
accordance with the terms of this Agreement, the Buyer's Stock will be duly
authorized, validly issued, fully paid and nonassessable.
6.6. Broker. The Buyer has not retained, utilized or been represented by
------
any broker, agent, finder or other intermediary in connection with the
negotiation or consummation of the transactions contemplated by this Agreement,
except with respect to Mr. Doug Abel, whom it shall be the Buyer's sole
responsibility to compensate.
6.7. Indemnification of Seller's Personal Guaranties. To the extent that
-----------------------------------------------
the Seller has personally guaranteed any performance or obligations of the
Company, the Buyer represents and warrants that (a) the Buyer will use
reasonable efforts to obtain a release of the Seller's personal guaranty or
guaranties, or, if it cannot secure such a release, (b) the Buyer shall
indemnify and hold the Seller harmless from and against
<PAGE>
-24-
any personal liabilities that may be imposed upon the Seller by virtue of the
Company performing or failing to perform in such a manner as to cause the Seller
personal liability under any personal guaranty or guaranties executed by the
Seller on behalf of the Company.
7. CONDUCT OF BUSINESS BY THE COMPANY AND GRAND HOPE PENDING CLOSING.
The Seller and Grand Hope covenant and agree that, from and after the date of
this Agreement and until the Closing, except as otherwise specifically consented
to or approved by the Buyer in writing:
7.1. Full Access. The Seller shall cause the Company and Grand Hope to
-----------
afford to the Buyer and its authorized representatives full access during normal
business hours to all properties, books, records, contracts and documents of the
Company and Grand Hope and a full opportunity to make such reasonable
investigations as they shall desire to make of the Company and Grand Hope, and
the Seller shall furnish or cause to be furnished to the Buyer and its
authorized representatives all such information with respect to the affairs and
businesses of the Company and Grand Hope as the Buyer may reasonably request.
7.2. Carry on in Regular Course. The Seller shall cause the Company and
--------------------------
Grand Hope to maintain their owned and leased properties in good operating
condition and repair, and to make all necessary renewals, additions and
replacements thereto, and to carry on their business diligently and
substantially in the same manner as heretofore and not make or institute any
unusual or novel methods of manufacture, purchase, sale, lease, management,
accounting or operation.
7.3. No General Increases. The Seller shall not permit the Company to
--------------------
grant any general or uniform increase in the rates of pay of employees of the
Company, nor grant any general or uniform increase in the benefits under any
bonus or pension plan or other contract or commitment to, for or with any such
employees; and the Company shall not increase the compensation payable or to
become payable to officers, key salaried employees or agents, or increase any
bonus, insurance, pension or other benefit plan, payment or arrangement made to,
for or with any such officers, key salaried employees or agents.
7.4. No Dividends, Issuances, Repurchases, etc. The Seller shall not
-----------------------------------------
permit the Company to declare or pay any dividends (whether in cash, shares of
stock or otherwise) on, or make any other distribution in respect of, any shares
of its capital stock, or issue, purchase, redeem or acquire for value any shares
of its capital stock.
7.5. Contracts and Commitments. The Seller shall not permit the
-------------------------
Company or Grand Hope to enter into any contract or commitment or engage in any
transaction not in the usual and ordinary course of business and consistent with
the business practices of the Company or Grand Hope.
<PAGE>
-25-
7.6. Purchase and Sale of Capital Assets. The Seller shall not permit
-----------------------------------
the Company or Grand Hope to purchase or sell or otherwise dispose of any
capital asset with a market value in excess of $1,000, or of capital assets of
market value aggregating in excess of $5,000 without the prior written consent
of the Buyer, and in no event shall purchase, sell or otherwise dispose of any
capital asset other than in the ordinary course of business.
7.7. Insurance. The Seller shall cause the Company and Grand Hope to
---------
maintain with financially sound and reputable insurance companies, funds or
underwriters, adequate insurance (including without limitation the insurance
described on Schedule 4.14) of the kinds, covering such risks and in such
-------------
amounts and with such deductibles and exclusions as are consistent with prudent
business practice.
7.8. Preservation of Organization. The Seller shall cause the Company to
----------------------------
use its best efforts to preserve its business organization intact, to keep
available to the Buyer the present key officers and employees of the Company and
to preserve for the Buyer the present relationships of the Company's suppliers
and customers and others having business relations with the Company.
7.9. No Default. The Seller shall not permit the Company to do any act,
----------
or omit to do any act, or permit any act or omission to act, which will cause a
material breach of any contract, commitment or obligation of the Company.
7.10. Compliance with Laws. The Seller shall cause the Company or Grand
--------------------
Hope to comply with all material laws, regulations and orders applicable with
respect to its business.
7.11. Advice of Change. The Seller will promptly advise the Buyer in
----------------
writing of any material adverse change in the business, condition, operations,
prospects or assets of the Company or the Largo Real Estate.
7.12. No Shopping. The Seller shall not, and shall not permit the Company
-----------
or Grand Hope to negotiate for, solicit or enter into any agreement with respect
to the sale of the KTL Stock or any substantial portion of the assets of the
Company or any merger or other business combination of the Company, or the Largo
Real Estate, to or with any Person other than the Buyer.
7.13. Consents of Third Parties. The Seller will employ his best efforts
-------------------------
to secure, before the Closing Date, the consent, in form and substance
satisfactory to the Buyer and the Buyer's counsel, to the consummation of the
transactions contemplated by this Agreement by each party to any contract,
commitment or obligation of the Company, under which such transactions would
constitute a default, would accelerate obligations of the Company or would
permit cancellation of any such contract.
<PAGE>
-26-
7.14. Payments on NJ Mortgage. The Seller will not permit the Company to
-----------------------
make, or require the Company to make, any payment of principal or interest on
the NJ Mortgage. Neither the Seller nor his spouse shall transfer their
interest in the NJ Mortgage or the NJ Note.
7.15. Satisfaction of Conditions Precedent. The Seller will use his best
------------------------------------
efforts to cause the satisfaction of the conditions precedent contained herein.
8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligation of the
Buyer to consummate the Closing shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions (to the extent noncompliance
is not waived in writing by the Buyer):
8.1. Representations and Warranties True at Closing. The representations
----------------------------------------------
and warranties made by the Seller and Grand Hope in or pursuant to this
Agreement shall be true and correct at and as of the Closing Date with the same
effect as though such representations and warranties had been made or given at
and as of the Closing Date.
8.2. Compliance with Agreement. The Seller shall have performed and
-------------------------
complied with all of his obligations under this Agreement to be performed or
complied with by him on or prior to the Closing Date.
8.3. No Material Change. There shall not have been or threatened to be,
------------------
any material damage to or loss or destruction of any properties or assets owned
or leased by the Company (whether or not covered by insurance) or any material
adverse change in the condition (financial or otherwise), operations, business,
prospects or assets of the Company or imposition of any laws, rules or
regulations which would materially adversely affect the condition (financial or
otherwise), operations, business, prospects or assets of the Company, or the
Largo Real Estate.
8.4. Seller's Certificate. The Seller and Grand Hope shall have
--------------------
delivered to the Buyer in writing, at and as of the Closing, a certificate duly
executed by each of them, in form and substance satisfactory to the Buyer and
the Buyer's counsel, certifying that the conditions in each of Sections 8.1, 8.2
and 8.3 have been satisfied.
8.5. Opinion of Counsel. At the Closing, Stull & Barber, P.A., counsel
------------------
to the Seller, the Company and Grand Hope shall have delivered to the Buyer a
written opinion, addressed to the Buyer and dated the Closing Date,
substantially in the form of Exhibit E hereto.
---------
8.6. Approvals. All corporate and other approvals in connection with the
---------
transactions contemplated by this Agreement and the form and substance of all
certificates and other documents delivered hereunder shall be reasonably
satisfactory in form and substance to the Buyer and its counsel.
<PAGE>
-27-
8.7. No Litigation. No restraining order or injunction shall prevent the
-------------
transactions contemplated by this Agreement and no action, suit or proceeding
shall be pending or threatened before any court or administrative body (a) in
which it will be or is sought to restrain or prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby, or (b) in connection with any claim for damages in excess
of $5,000 against the Company (except for the matters disclosed on Schedule 4.10
-------------
hereto).
8.8. Employment and Non-Competition Agreements. At the Closing, each of
------------------------------ ----------
the persons listed on Schedule 8.8 hereto shall have executed and delivered to
------------
the Buyer a non-competition agreement and an employment agreement in the form of
Exhibit F hereto (the "Employment and Non-Competition Agreements"), and each of
- --------- -----------------------------------------
such Employment and Non-Competition Agreements shall be in full force and
effect.
8.9. Resignations of Directors and Officers. As set forth on Schedule
-------------------------------------- --------
8.9 hereto, all of the directors and officers of the Company shall have resigned
- ---
their positions with the Company, on or prior to the Closing Date, and prior
thereto shall have executed such appropriate documents with respect to the
transfer or establishment of bank accounts, signing authority, etc., as the
Buyer shall have reasonably requested.
8.10. Environmental Reports. The Buyer shall have obtained, at its own
---------------------
expense, reports, in form and substance satisfactory to it, of an environmental
engineering firm satisfactory to the Buyer, as to compliance of the Largo Real
Estate and the New Jersey Real Estate and other leased properties as Buyer may,
in its sole discretion, deem necessary with all applicable environmental
statutes, rules and regulations, including without limitation the absence of any
oil or hazardous waste on such real estate and other leased real properties.
8.11. Title Insurance. The Buyer shall have received a title insurance
---------------
policy on the NJ Real Estate issued by a title insurer reasonably acceptable to,
and in form reasonably acceptable to, the Buyer naming the Company as the
insured.
8.12. Consents of Third Parties. The Seller will have obtained the
-------------------------
consent, in form and substance satisfactory to the Buyer and the Buyer's
counsel, to the consummation of the transactions contemplated by this Agreement
by each party to any contract, commitment or other obligation of the Company or
Grand Hope under which such transactions would constitute a default, would
accelerate obligations of the Company or Grand Hope or the Buyer or would permit
cancellation of any such contract.
8.13. Clearwater Lease. The Seller and the Company shall have entered
----------------
into a lease for the Clearwater Property in the form of Exhibit G (the
---------
"Clearwater Lease").
- -----------------
<PAGE>
-28-
8.14. Largo Lease. Grand Hope and the Seller shall have entered into the
-----------
Largo Lease.
8.15. NJ Amendment. The Seller, his spouse and the Company shall have
------------
entered into the NJ Amendment.
8.16. Proceedings and Documents Satisfactory. All proceedings in
--------------------------------------
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to the Buyer in connection with the
transactions contemplated by this Agreement shall be satisfactory in all
reasonable respects to the Buyer and the Buyer's counsel, and the Buyer shall
have received the originals or certified or other copies of all such records and
documents as the Buyer may reasonably request.
9. CONDITIONS PRECEDENT TO THE SELLER'S AND GRAND HOPE'S OBLIGATIONS.
The obligation of the Seller and Grand Hope to consummate the Closing shall be
subject to the satisfaction, at or prior to the Closing Date of each of the
following conditions (to the extent noncompliance is not waived in writing by
the Seller and Grand Hope):
9.1. Representations and Warranties True at Closing. The representations
----------------------------------------------
and warranties made by the Buyer in this Agreement shall be true and correct at
and as of the Closing Date with the same effect as though such representations
and warranties had been made or given at and as of the Closing Date.
9.2. Compliance with Agreement. The Buyer shall have performed and
-------------------------
complied with all of its obligations under this Agreement that are to be
performed or complied with by it at or prior to the Closing.
9.3. Closing Certificate. The Buyer shall have delivered to the Seller
-------------------
in writing, at and as of the Closing, a certificate duly executed by each of the
President and Treasurer of the Buyer, in form and substance satisfactory to the
Seller and his counsel, to the effect that the conditions in each of Sections
9.1 and 9.2 have been satisfied.
9.4. Opinion of Counsel. On the Closing Date, Bingham, Dana & Gould LLP,
------------------
counsel to the Buyer, shall have delivered to the Seller a written opinion,
dated the Closing Date and addressed to the Seller and Grand Hope, substantially
in the form of Exhibit H hereto.
---------
9.5. Largo Lease. Grand Hope and the Seller shall have entered into the
-----------
Largo Lease.
9.6. NJ Amendment. The Seller, his spouse and the Company shall have
------------
entered into the NJ Amendment.
<PAGE>
-29-
9.7. Clearwater Lease. The Company shall have entered into the
----------------
Clearwater Lease.
9.8. No Material Change. There shall not have been or threatened to be,
------------------
any material damage to or loss or destruction of any properties or assets owned
or leased by the Buyer (whether or not covered by insurance) or any material
adverse change in the condition (financial or otherwise), operations, business,
prospects or assets of the Buyer or imposition of any laws, rules or regulations
which would materially adversely affect the condition (financial or otherwise),
operations, business, prospects or assets of the Buyer.
9.9. Proceedings and Documents Satisfactory. All proceedings in
--------------------------------------
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to the Seller and Grand Hope in connection
with the transactions contemplated by this Agreement shall be satisfactory in
all reasonable respects to the Seller and Grand Hope and their counsel, and the
Seller and Grand Hope shall have received the originals or certified or other
copies of all such records and documents as the Seller and Grand Hope may
reasonably request.
10. CONFIDENTIAL INFORMATION. Any and all information disclosed by the
Buyer to the Seller, the Company or Grand Hope or by the Seller, the Company or
Grand Hope to the Buyer as a result of the negotiations leading to the execution
of this Agreement, or in furtherance thereof, which information was not already
known to the Seller, the Company or Grand Hope or to the Buyer, as the case may
be, shall remain confidential to each of the Seller, the Company and Grand Hope
and the Buyer and their respective employees and agents until the Closing Date.
If the Closing does not take place for any reason, the Seller, the Company and
Grand Hope and the Buyer agrees not to further divulge or disclose or use for
its benefit or purposes any such information at any time in the future unless it
has otherwise become public. The information intended to be protected hereby
shall include, but not be limited to, financial information, customers, sales
representatives, and anything else having an economic or pecuniary benefit to
the Buyer or any of the Seller, the Company and Grand Hope, respectively.
11. DEFINITIONS. As used herein the following terms not otherwise
defined have the following respective meanings:
"Income Taxes": any Taxes based upon or related to income, including any
------------
Taxes calculated in whole or in part based upon net revenues.
"Indebtedness": As applied to any Person (as defined in this Section 11),
------------
(a) all indebtedness of such Person for borrowed money, whether current or
funded, or secured or unsecured, (b) all indebtedness of such Person for the
deferred purchase price of property or services represented by a note or other
security, (c) all
<PAGE>
-30-
indebtedness of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the Seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (d) all indebtedness of such Person secured by a purchase money
mortgage or other lien to secure all or part of the purchase price of property
subject to such mortgage or lien, (e) all obligations under leases which shall
have been or must be, in accordance with generally accepted accounting
principles, recorded as capital leases in respect of which such Person is liable
as lessee, (f) any liability of such Person in respect of banker's acceptances
or letters of credit, and (g) all indebtedness referred to in clause (a), (b),
(c), (d), (e) or (f) above which is directly or indirectly guaranteed by such
Person or which such Person has agreed (contingently or otherwise) to purchase
or otherwise acquire or in respect of which it has otherwise assured a creditor
against loss.
"IRS": The United States Internal Revenue Service.
---
"Non-Income Taxes": any Taxes other than Income Taxes.
----------------
"Person": A corporation, an association, a partnership, a limited
------
liability company, an organization, a business, an individual, a government or
political subdivision thereof or a governmental agency.
"Seller's Knowledge": "to the knowledge of the Seller", "known to Seller"
------------------
and similar qualifiers shall be deemed to include not only the actual knowledge
of the Seller but also all facts and circumstances of which the Seller could
reasonably be expected to obtain actual knowledge in the course of the diligent
and prudent management of the day-to-day affairs of the business of the Company
and Grand Hope.
"State": Any state or commonwealth of the United States of America; the
-----
District of Columbia; the Commonwealth of Puerto Rico; and any other dependency,
possession or territory of the United States of America.
"Subsidiary": With respect to any Person, any corporation a majority (by
----------
number of votes) of the outstanding shares of any class or classes of which
shall at the time be owned by such Person or by a Subsidiary of such Person, if
the holders of the shares of such class or classes (a) are ordinarily, in the
-
absence of contingencies, entitled to vote for the election of a majority of the
directors (or persons performing similar functions) of the issuer thereof, even
though the right so to vote has been suspended by the happening of such a
contingency, or (b) are at the time entitled, as such holders, to vote for the
-
election of a majority of the directors (or persons performing similar
functions) of the issuer thereof, whether or not the right so to vote exists by
reason of the happening of a contingency.
<PAGE>
-31-
"Tax": Any federal, state, local, or foreign income, gross receipts,
---
franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer,
registration, value added, excise, natural resources, severance, stamp,
occupation, premium, windfall profit, environmental, customs, duties, real
property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other tax or levy, of
any kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing.
12. INDEMNIFICATION.
12.1. Indemnity by the Seller. Subject to the overall limitations,
-----------------------
minimum amounts and time limitations set forth in Section 12.5, the Seller and
Grand Hope (in the case of Grand Hope, only insofar as it relates to Largo Site
Claims, as defined below) jointly and severally agree to indemnify and hold the
Buyer and the Company (and their respective directors, officers, employees and
affiliates) harmless from and with respect to any and all claims, liabilities,
losses, damages, costs and expenses, including without limitation the fees and
disbursements of counsel (collectively, the "Losses") related to or arising,
------
directly or indirectly, out of:
(i) any failure or any breach by the Seller or Grand Hope of any
representation or warranty, covenant, obligation or undertaking made by the
Seller or Grand Hope in this Agreement, any Schedule or Exhibit hereto, or
any other statement, certificate or other instrument delivered pursuant
hereto;
(ii) any actual or alleged liability of the Company (A) for any
Income Taxes with respect to any period through the Closing Date, including
any Income Taxes arising as a result of the Section 338(h)(10) election
referred to in Section 1.4 of this Agreement, and (B) for any Non-Income
Taxes with respect to any period through the Closing Date, to the extent,
in the case of this clause (B), such liability for Non-Income Taxes is not
adequately reflected or accrued for on the balance sheet included in the
Interim Financials or was incurred since March 31, 1996 not in the ordinary
course of business and for which an accrual does not exist on the Company's
books at the Closing Date;
(iii) any actual or alleged liability for death or injury to person
or property, to the extent not covered by insurance, as a result of any
actual or alleged defect in any product sold or manufactured or service
provided by the Company on or prior to the Closing Date but only to the
extent that the liability with respect thereto exceeds any Recorded
Liability therefor;
(iv) whether or not the event, circumstance or fact giving rise to
Losses also constitutes a breach of any of the Seller's and Grand Hope's
representations and warranties in Sections 4.13 and 5.9 or is disclosed on
any Schedule hereto, (A) the violation by the Company, the Seller or Grand
Hope
<PAGE>
-32-
at any time prior to the Closing Date of any Environmental Laws, (B) the
release, emission or discharge (whether or not by the Company, the Seller
or Grand Hope) or presence at any time on or prior to the Closing Date of
any Hazardous Substance, toxic pollutants or other chemical by-products
onto, from or into or on any real property presently owned, leased or
operated by the Seller, the Company or Grand Hope (with any Losses to
include any liability or alleged liability for cleanup, removal,
remediation or other response costs or for death or injury to person or
property), (C) the release, emission or discharge by the Company, the
Seller or Grand Hope or any of their agents at any time on or prior to the
Closing Date of any Hazardous Substance, toxic pollutants or other chemical
by-products onto, from or into or on any real property formerly owned,
leased or operated by the Seller, the Company or Grand Hope or any of their
predecessors in interest (with any Losses to include any liability or
alleged liability for cleanup, removal, remediation or other response costs
or for death or injury to person or property) or (D) any disposal or
shipment by the Company or Grand Hope prior to the Closing Date of any
Hazardous Substance, toxic pollutants or other chemical by-products (with
any Losses to include any liability or alleged liability for cleanup,
removal, remediation or other response costs or for death or injury to
person or property);
(v) any contractual product warranty claims arising out of
defects in any product shipped by the Company on or prior to the Closing
Date but only to the extent that the liability with respect thereto exceeds
any accrual therefor on the balance sheet included in the Interim
Financials or such liability was incurred since March 31, 1996 not in the
ordinary course of business and for which an accrual does not exist on the
Company's books at the Closing; or
(vi) any liability of the Company with respect to any of the items
disclosed on Schedules 4.10, 4.11, 4.13, 4.17(d) or 5.9 hereto.
----------------------------------- ---
12.2. Indemnity by the Buyer. The Buyer agrees to indemnify and hold the
----------------------
Seller and Grand Hope (and its directors, officers, employees and affiliates)
harmless from and with respect to any and all Losses suffered by them, related
to or arising from, directly or indirectly, any failure or any breach by the
Buyer of any representation or warranty, covenant, obligation or undertaking
made by the Buyer in this Agreement, any Schedule or Exhibit hereto, or any
other statement, certificate or other instrument delivered pursuant hereto to
the Seller or Grand Hope, as applicable.
12.3. Claims.
------
(a) Notice. Any party seeking indemnification hereunder (the
------
"Indemnified Party") shall promptly notify the other party hereto (the
- ------------------
"Indemnifying Party") of any action, suit, proceeding, demand or breach (a
- -------------------
"Claim") with respect to which the Indemnified Party claims indemnification
- ------
hereunder, provided that failure of
--------
<PAGE>
-33-
the Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations under this Section 12 except to the extent, if at all,
that such Indemnifying Party shall have been prejudiced thereby.
(b) Third Party Claims. If such Claim relates to any action,
------------------
suit, proceeding or demand instituted against the Indemnified Party by a third
party (a "Third Party Claim"), other than a Third Party Claim subject to the
-----------------
Settlement Agreement, the Indemnifying Party shall be entitled to participate in
the defense of such Third Party Claim after receipt of notice of such claim from
the Indemnified Party. Within thirty (30) days after receipt of notice of a
particular matter from the Indemnified Party, the Indemnifying Party may assume
the defense of such Third Party Claim, in which case the Indemnifying Party
shall have the authority to negotiate, compromise and settle such Third Party
Claim, if and only if the following conditions are satisfied:
(i) the Indemnifying Party shall have confirmed in writing
that it is obligated hereunder to indemnify the Indemnified Party with respect
to such Third Party Claim; and
(ii) the Indemnified Party shall not have given the
Indemnifying Party written notice that it has determined, in the exercise of its
reasonable discretion, that matters of corporate or management policy or a
conflict of interest make separate representation by the Indemnified Party's own
counsel advisable.
If both of the preceding conditions are satisfied, the Indemnified Party
shall retain the right to employ its own counsel and to participate in the
defense of any Third Party Claim, the defense of which has been assumed by the
Indemnifying Party pursuant hereto, but the Indemnified Party shall bear and
shall be solely responsible for its own costs and expenses in connection with
such participation.
(c) Third-Party Claims relating to motor vehicle accidents
occurring prior to the Closing shall be defended as provided in the Settlement
Agreement.
12.4. Method and Manner of Paying Claims. In the event of any Claims
----------------------------------
under this Section 12, the claimant shall advise the party or parties who are
required to provide indemnification therefor in writing of the amount and
circumstances surrounding such Claim. With respect to liquidated Claims, if
within thirty days the other party has not contested such Claim in writing, the
other party will pay the full amount thereof within ten days after the
expiration of such period. Any amount owed by an Indemnifying Party hereunder
with respect to any Claim may be set-off by the Indemnifying Party against any
amounts owed by the Indemnified Party to such Indemnifying Party. The unpaid
balance of a Claim shall bear interest at a rate per annum equal to the rate
announced by The First National Bank of Boston as its "Base Rate" plus two
----
percent (2%) from the later of the date notice thereof is given by the
<PAGE>
-34-
Indemnified Party to the Indemnifying Party or the date on which the Indemnified
Party paid or incurred the applicable Loss.
12.5. Limitations on Indemnification.
------------------------------
(a) The Seller shall not be required to indemnify the Buyer
hereunder except to the extent that the cumulative amount of Losses for which
the Buyer is otherwise entitled to indemnification pursuant to this Section 12
exceeds $100,000, whereupon the Buyer shall be entitled to be paid the excess of
(i) the aggregate amount of all such Losses over (ii) $100,000, subject to the
limitations on maximum amount of recovery set forth in Section 12.5(b);
provided, that Losses related to or arising directly or indirectly out of any of
- --------
the items listed on Schedule 4.25 hereto or any inaccuracies in any
-------------
representation or warranty made by the Seller or Grand Hope in Sections 4.2,
4.4, 4.5, 4.10, 4.17, 4.25, 4.30, 5.2, 5.6, 5.8, 5.9 or 5.11 or payable with
respect to claims for indemnification made with respect to Sections 12.1(ii),
(iii), (v) or (vi) (except insofar as (vi) relates to Schedule 4.13(b)) hereof
-----------------
or payable with respect to claims for indemnification under Section 12.1(iv)(A)
or (B) and relating in any way to the Largo Real Estate (a "Largo Site Claim",
----------------
with all of the foregoing referred to collectively as "Unlimited Claims") shall
----------------
be indemnified in their entirety by the Seller and shall not be subject to the
limitations set forth in this Section 12.5(a).
(b) The aggregate Losses payable by an Indemnifying Party
pursuant to this Section 12 with respect to all claims for indemnification,
other than with respect to Unlimited Claims and any claim for breach of the
representations and warranties contained in Section 4.13 or Section 5.9 and any
claim under Section 12.1(iv) (collectively "Environmental Claims"), shall not
--------------------
exceed the aggregate of the Stock Purchase Price plus $3,500,000. Moreover, the
aggregate Losses payable by an Indemnifying Party with respect to all Largo Site
Claims shall not exceed $2,400,000. As provided in the Largo Lease, the Company
may reduce the purchase price payable for the Largo Real Estate by the amount of
all Losses attributable to Largo Site Claims, including all costs of remedial or
investigative work performed subsequent to August 16, 1996. As provided in the
Largo Lease, in the event that the Company reduces the purchase price payable
for the Largo Real Estate to reflect Largo Site Claims in the nature of costs to
be incurred in the future in connection with known conditions at or relating to
the Largo Real Estate, if such costs are never actually incurred the Company
shall pay to Grand Hope that portion of the purchase price withheld plus
interest at a rate of 8% per annum from the date the reduced purchase price for
the Largo Real Estate was actually paid to the date the withheld portion of the
purchase price is actually paid.
(c) No Indemnifying Party shall be liable for any Losses pursuant
to this Section 12 unless a written claim for indemnification in accordance with
Section 12.4 is given by the Indemnified Party to the Indemnifying Party with
respect thereto within one (1) year after the Closing, except that this time
limitation shall not apply to
<PAGE>
-35-
any Losses related to or arising directly or indirectly out of any Unlimited
Claims, Environmental Claims or Section 6.7, as to which in each case the
applicable statute of limitations shall apply.
13. GENERAL.
13.1 Survival of Representations, Warranties and Covenants. The
-----------------------------------------------------
representations, warranties and covenants of the parties hereto contained in
this Agreement or otherwise made in writing in connection with the transactions
contemplated hereby (in each case except as affected by the transactions
contemplated by this Agreement) shall be deemed material and, notwithstanding
any investigation by them, shall be deemed to have been relied on by them and
shall survive the Closing, and the consummation of the transactions contemplated
hereby. Each representation and warranty made by the Seller or Grand Hope or
the Buyer in this Agreement shall expire on the last day, if any, that Claims
for breaches of such representation or warranty may be made pursuant to Section
12.5 hereof, except that any such representation or warranty that has been made
the subject of a Claim prior to such expiration date shall survive with respect
to such Claim until the final resolution of such Claim pursuant to Section 12.
13.2. Expenses. The Company shall be responsible for all costs of site
--------
investigation and tank removal for the Largo Real Estate, but only to the extent
incurred on or prior to August 16, 1996. The Company shall be responsible for
up to $35,000 in attorney's fees and $15,000 in accountant's fees incurred on
behalf of the Seller and Grand Hope in connection with the transactions
contemplated by this Agreement. Except as provided above in this Section 13.2,
all expenses of the preparation, execution and consummation of this Agreement
and of the transactions contemplated hereby, including without limitation
attorneys', accountants' and outside advisers' fees and disbursements, shall be
borne by the party incurring such expenses.
13.3. Notices. All notices, demands and other communications hereunder
-------
shall be in writing or by written telecommunication, and shall be deemed to have
been duly given if delivered personally or if mailed by certified mail, return
receipt requested, postage prepaid, or if sent by overnight courier, or sent by
written telecommunication, as follows:
If to the Seller and/or Grand Hope, to:
Ronald N. Damico
10530 Vonn Road
Largo, Florida 34644
with a copy sent contemporaneously to:
<PAGE>
-36-
R. Jeffrey Stull, Esq.
Stull & Barber, P.A.
602 South Boulevard
Tampa, Florida 33606
If to the Buyer, to:
J. Michael May, Esq.
Suite 1101
301 Commerce Street
Fort Worth, Texas 76102
with a copy sent contemporaneously to:
John R. Utzschneider, Esq.
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
Any such notice shall be effective (a) if delivered personally, when
received, (b) if sent by overnight courier, when receipted for, (c) if mailed,
three (3) days after being mailed as described above, and (d) if sent by written
telecommunication, when dispatched.
13.4. Entire Agreement. This Agreement contains the entire understanding
----------------
of the parties, supersedes all prior agreements and understandings relating to
the subject matter hereof and shall not be amended except by a written
instrument hereafter signed by all of the parties hereto.
13.5. Governing Law. The validity and construction of this Agreement
-------------
shall be governed and construed and enforced in accordance with the internal
laws (and not the choice-of-law rules) of the State of Florida and the venue for
any disputes arising between the parties hereunder shall be in an appropriate
court or other tribunal in Florida.
13.6. Sections and Section Headings. The headings of sections and
-----------------------------
subsections are for reference only and shall not limit or control the meaning
thereof.
13.7. Assigns. This Agreement shall be binding upon and inure to the
-------
benefit of the parties hereto and their respective heirs, successors and
permitted assigns. Neither this Agreement nor the obligations of any party
hereunder shall be assignable or transferable by such party without the prior
written consent of the other party hereto; provided, however, that nothing
-------- -------
contained in this Section 13.7 shall prevent the Buyer, without the consent of
the Seller, (a) from transferring or assigning this Agreement or its rights or
obligations hereunder to another entity controlling, under
<PAGE>
-37-
the control of, or under common control with the Buyer or (b) from assigning all
or part of its rights or obligations hereunder by way of collateral assignment
to any bank or financing institution providing financing for the acquisition
contemplated hereby, but no such transfer or assignment made pursuant to clauses
(a) or (b) shall relieve the Buyer of its obligation under this Agreement.
13.8. Severability. In the event that any covenant, condition, or other
------------
provision herein contained is held to be invalid, void, or illegal by any court
of competent jurisdiction, the same shall be deemed to be severable from the
remainder of this Agreement and shall in no way affect, impair, or invalidate
any other covenant, condition, or other provision contained herein.
13.9. Further Assurances. The parties agree to take such reasonable steps
------- ----------
and execute such other and further documents as may be necessary or appropriate
to cause the terms and conditions contained herein to be carried into effect.
13.10. No Implied Rights or Remedies. Except as otherwise expressly
-----------------------------
provided herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or to give any person, firm or corporation, other than
the Seller, Grand Hope and the Buyer and their respective shareholders, if any,
any rights or remedies under or by reason of this Agreement.
13.11. Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.12. Satisfaction of Conditions Precedent. Each of the Seller, Grand
------------------------------------
Hope and the Buyer will use its or his best efforts to cause the satisfaction of
the conditions precedent contained in this Agreement; provided, however, that
-------- -------
nothing contained in this Section 13.12 shall obligate either party hereto to
waive any right or condition under this Agreement.
13.13. Public Statements or Releases. Each of the parties hereto agrees
-----------------------------
that prior to the consummation of the Closing no party to this Agreement will
make, issue or release any public announcement, statement or acknowledgment of
the existence of, or reveal the status of, this Agreement or the transactions
provided for herein, without first obtaining the consent of the other party
hereto. Nothing contained in this Section 13.13 shall prevent either party from
making such disclosures as such party may consider necessary to satisfy such
party's legal or contractual obligations.
13.14. Disclosure in Schedules. For purposes of this Agreement, with
-----------------------
respect to any matter that is clearly disclosed in any Schedule in such a way as
to make its relevance to the information called for by another Section of this
Agreement readily apparent, such matter shall be deemed to have been included in
the applicable
<PAGE>
-38-
Schedule in response to such other Section, notwithstanding the omission of any
appropriate cross-reference thereto.
13.15. Effect of Letter of Intent; Adjustment to Purchase Price. With
--------------------------------------------------------
respect to the letter of intent, dated April 25, 1996 (the "Letter of Intent"),
----------------
between the Seller and the Buyer, the Seller acknowledges that it has caused the
Company to operate on a basis consistent with Section 10 of the Letter of Intent
since April 25, 1996, notwithstanding the stated expiration date set forth in
the Letter of Intent. Accordingly, the Company has not since at least June 1,
1996 engaged in any of the activities prohibited by Section 10 of the Letter of
Intent without seeking the Buyer's prior consent. In light of the significant
negative control exercised by the Buyer over the Company since at least June 30,
1996, and delays in the consummation of the transactions contemplated by this
Agreement, the Buyer and the Seller have agreed to increase the Cash Portion by
$108,000 from $8,010,000 to the $8,118,000 amount specified in Section 1.2 to
compensate the Seller for such delay.
<PAGE>
-39-
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed and delivered as a sealed
instrument as of the date and year first above written.
BUYER:
-----
AMERITRUCK DISTRIBUTION CORP.
Attest:
/s/ J. Michael May By: /s/ M. Lawrence
- ---------------------------- -----------------------------------------
Secretary Title: President and Chief Executive
Officer
SELLER:
------
RONALD N. DAMICO
/s/ Sandra L. Damico /s/ Ronald N. Damico
- ---------------------------- -------------------------------
Witness Individually
Attest: GRAND HOPE INVESTMENTS, INC.
/s/ Ronald Damico By: /s/ Sandra L. Damico
- ---------------------------- -----------------------------------------
Secretary Title: President
<PAGE>
LIST OF SCHEDULES
---- -- ---------
<TABLE>
<CAPTION>
SCHEDULE DESCRIPTION
- -------- -----------
<S> <C>
2.1 Largo Real Estate
3.2(e) New Jersey Real Estate
4.4 List of Individuals Whose Stock Interests Were Redeemed
4.7 Consents and Permits
4.8 Financial Statements
4.9 Certain Changes
4.10 Litigation
4.12 Liens and Encumbrances
4.12(a) Exceptions Concerning Certain Real Estate
4.12(b) Descriptions of Real Estate Leases
4.13 Real Estate Legal Descriptions
4.13(b) Underground Storage Tanks
4.13(c) Site Assessments and Reports
4.14 List of Policies of Insurance
4.15 Certain Contracts
4.16 Certain Officers and Employees
4.17(a) Employee Benefit Plans
4.17(d) Exceptions Concerning Employee Benefit Plans
4.19 Potential Conflicts of Interest
4.20 Patents, Trademarks, Etc.
4.21 Certain Suppliers and Customers
4.25 Exceptions on Tax Matters
4.27 Bank Accounts; Authorized Signatures
5.9 Exceptions Concerning Safety, Zoning and Environmental Matters
6.5 Capitalization
8.8 Persons to Receive Employment Contracts
8.9 Resignation of Officers and Directors
</TABLE>
Pursuant to Item 601(b)(2) of Regulation S-K, the foregoing schedules to
the Stock Purchase Agreement are not included as part of this Current Report on
Form 8-K. The Registrant hereby agrees to furnish supplementally copies of any
of the foregoing schedules to the Commission upon request.
<PAGE>
EXHIBIT A
AGREEMENT CONCERNING
PROCEDURE FOR SETTLEMENTS
AND SATISFACTION OF LITIGATION
------------------------------
THIS AGREEMENT, dated this 23 day of August, 1996, is by and between RONALD N.
DAMICO, an individual residing in Pinellas County, Florida (hereinafter the
"Seller"), and AMERITRUCK DISTRIBUTION CORP., a Delaware corporation
(hereinafter the "Buyer"), hereinafter the "Settlement Procedure Agreement."
WHEREAS, Seller and Buyer have entered into that certain Stock Purchase
Agreement dated August 23 , 1996, wherein Seller agreed to sell all of his KTL
Stock to Buyer (hereinafter the "Purchase Agreement"); and
WHEREAS, in the Purchase Agreement, Seller represents and warrants that all
liabilities for pending claims, including litigated matters, have been
adequately accrued for in the Financial Statements of KTL, Inc. (the "Company");
and
WHEREAS, in the Purchase Agreement Seller agreed to indemnify Buyer against
Buyer's losses, if any of Seller's representations and warranties are untrue or
inaccurate or if the amounts accrued as liabilities for losses on the balance
sheet included in the Interim Financials (the "Balance Sheet") are inadequate;
and
WHEREAS, in the Purchase Agreement Buyer has agreed to pay to Seller as
additional consideration for the KTL Stock the difference between (a) the actual
realized amount of liabilities arising from motor vehicle accidents, and (b) the
amount of liability accrued on the Balance Sheet (the "Recorded Liability"), if
(a) is lower than (b); and
WHEREAS, the parties desire to establish a procedure for the compromise,
settlement, payment or other closure of the Company's
<PAGE>
-2-
claims as the same may affect Seller's indemnifications to Buyer, or Buyer's
payment of future contingent consideration to Seller;
NOW, THEREFORE, intending to be legally bound, the parties agree as
follows:
1. Terms and References. Except as may be specifically defined in this
--------------------
Settlement Procedure Agreement, references to capitalized terms shall have the
same meaning assigned to them in the Purchase Agreement.
2. Settlement of Claims Fully Covered by Insurance. Claims against the
-----------------------------------------------
Company arising from motor vehicle accidents occurring prior to the Closing
(hereinafter "Claims") if fully covered by policies of insurance (including
applicable deductibles) may be paid, compromised or otherwise settled by the
Company without consultation with or the consent of the Seller.
3. Settlement of Claims Not Adequately Covered by Insurance. Claims for
--------------------------------------------------------
which the payment or settlement will exceed the limits of applicable policies of
insurance (the "Excess Claims"), may be paid, compromised or settled by the
Company at the direction of the Seller. The express consent of the Company,
which consent shall not be unreasonably withheld, shall be required if the
payment, compromise or other settlement is to exceed the sum of (i) applicable
insurance, plus (ii) the Recorded Liability, if any, for such claim; provided
however, that such consent shall be unnecessary if Seller tenders to the Company
payment of such excess. The tender may be made payable jointly to the Company
and the claimant, or to the Company. In such case the Company shall be required
to pay the claimant the amount of the Recorded Liability plus Buyer's tender.
4. Procedure for Excess Claims. In the event that Seller desires to pay,
--------------------
compromise or otherwise settle any Excess Claim for an amount in excess of the
limits of applicable policies of insurance, the Seller shall notify the Buyer of
his desire to pay, compromise or effect a settlement. Buyer shall have the
right to jointly participate in the settlement process, to the extent feasible,
including formulation of strategies, offers, discussions, mediations and review
of correspondence and agreements, as well as decisions leading to or
constituting actual compromise or settlement of such Excess Claim; provided
however, that Buyer shall not unreasonably interfere with Seller's right to
conduct negotiations.
<PAGE>
-3-
5. Pledge of Cooperation.
---------------------
(a) Buyer and Seller pledge to one another the highest degree of
cooperation in dealing with Excess Claims. Buyer and Seller shall promptly
respond to all requests; participate or waive participation in meetings,
telephone conferences and the like; and otherwise make themselves available to
expeditiously participate in the process of reaching a compromise or settlement
of an Excess Claims.
(b) Neither Buyer nor Seller shall unreasonably take any actions,
including exercise of appeal rights, nor unreasonably withhold any consents or
approvals, to the detriment ofthe other, and at all times shall be mindful of
the best interests of the Company as well as their own. Buyer and the Company
shall act in good faith to protect Seller's interest in any Recorded Liability
and shall not unreasonably insist that Excess Claims be compromised or otherwise
settled for the Recorded Liability, if any, for such Excess Claim, or an amount
in excess thereof. Neither Buyer nor Seller shall unreasonably fail or refuse
to approve a compromise or other settlement for the full Recorded Liabiilty, if
any, for such Excess Claim or an amount in excess thereof, where the Company
would become subject to unreasonable risk of loss in the event of an adverse
judgment, or subject the Company to unreasonable costs in the event of a
frivolous appeal.
6. Arbitration of Disputes.
-----------------------
(a) In the event that either Buyer or Seller propose a payment,
compromise or settlement of an Excess Claim with which the other party
disagrees, or any other disputes arising out of this Settlement Procedures
Agreement, then the parties shall immediately enter into binding arbitration,
the costs of which shall be borne equally by the parties. Buyer and Company
hereby consent to the representation of the Seller by any attorney from the law
firm of Stull & Barber, P.A In any such arbitration, each party shall be
responsible for its own attorney's fees.
(b) Arbitration shall be submitted to the American Arbitration
Association in Tampa, Florida, or to such other arbitration firm or arbiter as
the parties may mutually agree if the American Arbitration Association is unable
to respond promptly to the arbitration.
7. Judgments-, Appeals.
-------------------
(a) The Company shall not have the right to pay any final judgments
arising out of the litigation of Excess Claims, until all appeal rights have
been exhausted, except with Seller's consent and except as provided in Section 2
herein above.
<PAGE>
-4-
(b) Either Buyer or Seller shall have the right to cause the Company
to file an appeal and request a stay of judgment. In the event of an appeal,
Buyer and Seller shall share the appeal costs not otherwise covered by
insurance. Costs of the appeal shall include all reasonable attorneys fees and
expenses, appeal costs and post-judgment interest, to the extent not covered by
applicable policies of insurance. Prior to any appeal, however, the Company
shall pay all costs and reasonable attorney's fees not covered by such
insurance, including the fees of counsel selected by the Seller.
8. Authority-, Notices. The following persons are hereby designated as
----------
the authorized representatives of the Buyer and Seller to take all actions
contemplated in this Settlement Procedure Agreement, and upon whom the other
parties may serve written notices:
For the Buyer:
J. Michael May, General Counsel
AmeriTruck Distribution Corp.
301 Commerce St., Suite 1101
Fort Worth, TX 76102
(817)332-2556 - Fax with a copy to:
with a copy to:
John R. Utzschneider, Esq.
Bingham, Dana & Gould, L.L.P.
150 Federal Street
Boston, MA 02110
(617) 951-8736 - Fax
For Sellers:
Ronald N. Damico
1501 Lake Avenue, S.E.
Largo, FL 34641
(813) 581-9794 - Fax
With a copy to:
R. Jeffrey Stull, Esq.
Stull & Barber, P.A.
602 South Boulevard
Tampa, FL 33606
(813) 251-0974 - Fax
<PAGE>
-5-
The name and/or address of the parties' representatives may be changed upon
written notice to the other.
9. Survival. This Settlement Procedure Agreement is entered into as an
essential part of the Purchase Agreement, and is intended to govern the actions
of Buyer and Seller after Closing. Accordingly, this Settlement Procedure
Agreement shall survive the Closing and shall remain in fully force and effect
until all Excess Claims are paid, compromised, settled or otherwise finally
closed.
WHEREFORE, the parties have entered into this Settlement Procedure Agreement on
the date first shown above.
Attest: BUYER: AmeriTruck Distribution Corp.
___________________________ by: ___________________________________
Secretary Michael L. Lawrence
Chief Executive Officer
SELLER:
___________________________ _____________________________________
Ronald N. Damico
<PAGE>
EXHIBIT B
LEASE
by and between
GRAND HOPE INVESTMENTS, INC.
("Landlord")
and
KTL, INC.
("Tenant")
August 23, 1996
Premises at 1501 Lake Avenue, S.E., Largo, Florida
<PAGE>
LEASE AGREEMENT
---------------
ARTICLE I
Reference Data
--------------
1.1 Subjects Referred To.
--------------------
Each reference in this Lease to any of the following subjects shall be
construed to incorporate the data stated for that subject in this Section 1.1.
Commencement Date: the execution date of this Lease.
------------ ----
Premises: That certain parcel of real property and improvements thereon,
--------
more particularly described on Exhibit A.
------- -
Landlord: Grand Hope Investments, Inc., a Florida corporation.
--------
Original Address of Landlord: c/o Ronald N. Damico, 10530 Vonn Road,
-------- ------- -- --------
Largo, Florida 34644.
Tenant: KTL, Inc., a Florida corporation.
------
Original Address of Tenant: c/o J. Michael May, Esq., Suite 1101, 301
-------- ------- -- ------
Commerce Street, City Center Tower II, Fort Worth, Texas 76102.
Lease Term: Eighteen (18) months.
----- ----
Annual Fixed Rental Rate: $192,000
------ ----- ------ ----
Public Liability Insurance Limits (per occurrence):
------ --------- --------- ------
Bodily Injury: $1,000,000, or greater amount as reasonably required
by Landlord from time to time.
Property Damage: $1,000,000, or greater amount as reasonably required
by Landlord from time to time.
Broker: None
------
<PAGE>
-2-
1.2 Exhibit.
-------
The Exhibit listed below in this Section is incorporated in this Lease by
reference and is to be construed as a part of this Lease:
EXHIBIT A: Premises.
ARTICLE II
Premises and Term
-----------------
2.1 Premises. Landlord hereby leases and demises to Tenant, and Tenant
--------
hereby leases from Landlord, the Premises.
2.2 Commencement Date. The commencement date of this Lease (the
------------ ----
"Commencement Date") shall be the date of execution of this Lease.
2.3 Term. TO HAVE AND TO HOLD for an original term beginning on the
----
Commencement Date, and continuing until the last day of the eighteenth month
after the Commencement Date shall occur (the "Expiration Date"), unless sooner
terminated as hereinafter provided.
ARTICLE III
Preparation of the Premises
---------------------------
3.1 Premises Leased AS-IS; WHERE IS
-------------------------------
Landlord has leased the Premises to Tenant in their "as-is" and "where is"
condition and, except as set forth in Section 3.2 of this Lease, Landlord shall
have no further obligations during the term of this Lease to renovate, repair or
maintain the Premises or any portion thereof. Tenant acknowledges that this
Lease is on an "absolutely net" basis and that all obligations to renovate,
repair or maintain the Premises or any portion thereof shall be performed by
Tenant, at its sole cost and expense, subject to the qualifying provisions of
Sections 5.1.3, 5.1.4 and 5.1.5 of this Lease.
<PAGE>
-3-
3.2 Tenant's Work. Tenant may make additional modifications,
-------- ----
installations, alterations or additions in, to or on the Premises to accommodate
the operation of its business thereon all at the sole cost and expense of Tenant
(collectively, the "Modifications"). All such modifications shall be subject to
the prior written approval of Landlord, which approval shall not be unreasonably
withheld. Tenant shall keep the Premises and the improvements thereon free from
any liens arising out of any work performed, material furnished, or obligations
incurred by Tenant.
ARTICLE IV
Rent
----
4.1 The Fixed Rent. The Fixed Rent shall be $192,000 per annum during the
--- ----- ----
Term of this Lease.
4.2 Payment of the Fixed Rent. Tenant covenants and agrees to pay rent to
------- -- --- ----- ----
Landlord at the Original Address of Landlord or at such other place or to such
other person or entity as Landlord may by notice to Tenant from time to time
direct, the Fixed Rent set forth in Section 4.1 in equal installments equal to
1/12th of the Fixed Rent in advance on the first day of each calendar month
included in the term; and for any portion of a calendar month at the beginning
or end of the term, at that rate payable in advance for such portion.
4.3 Additional Rent. In order that the Fixed Rent shall be absolutely net
---------- ----
to Landlord, Tenant covenants and agrees to pay, as Additional Rent, all other
costs associated with the Premises, including but not limited to taxes,
municipal or state betterment assessments, insurance costs and utility charges
with respect wazzu to the Premises as provided in this Section 4.3 as follows:
4.3.1 Real Estate Taxes. Tenant shall pay, directly to the Landlord
---- ------ -----
or for its benefit: (i) all taxes, assessments (special or otherwise), levies,
fees, water and sewer rents and charges, and all other government levies and
charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, which are, at any time prior to or during the Term hereof, imposed
or levied upon or assessed against (A) the Premises, (B) any Fixed Rent,
Additional Rent or other sum payable hereunder or (C) this Lease, or the
leasehold estate hereby created, or which arise in respect of the operation,
possession or use of the Premises; (ii) all gross receipts or similar taxes
imposed or levied upon, assessed
<PAGE>
-4-
against or measured by any Fixed Rent, Additional Rent or other sum payable
hereunder; (iii) all sales, value added, use and similar taxes at any time
levied, assessed or payable on account of the acquisition, leasing or use of the
Premises; and (iv) all charges for utilities furnished to the Premises which may
become a lien on the Premises (collectively "taxes and assessments" or if
singular "tax or assessment"). For each tax or assessment period, or installment
period thereof included in the Term, all such payments shall be made by Tenant
not less than fifteen days prior to the last date on which the same may be paid
without interest or penalty. For any fraction of a tax or assessment period, or
installment period thereof, included in the Term at the beginning or end
thereof, Tenant shall pay to Landlord, within ten (10) days after receipt of
invoice therefor, the fraction of taxes and assessments so levied or assessed or
becoming payable which is allocable to such included period.
Nothing contained in this Lease shall, however, require Tenant to pay any
income taxes, estate, succession or inheritance taxes. Landlord shall furnish
to Tenant a copy of any notice of any public, special or betterment assessment
received by Landlord concerning the Premises.
4.3.2 Insurance.
---------
4.3.2.1 Insurance Taken Out by Tenant. Tenant shall, as
--------- ----- --- -- ------
Additional Rent, take out and maintain throughout the Term and shall provide
Landlord with a copy of the following insurance, which shall be cancellable only
after ten (10) days' written notice by the insurer to Landlord:
(a) Comprehensive liability insurance indemnifying Landlord and Tenant
against all claims and demands for any injury to person or property which may be
claimed to have occurred on the Premises or on the sidewalk or ways adjoining
the Premises, in amounts equal to the limits set forth in Section 1.1; and
(b) Worker's compensation insurance with statutory limits covering all of
Tenant's employees working at the Premises.
4.3.2.2 Waiver of Subrogation. All insurance which is carried
------ -- -----------
by either party with respect to the Premises or to furniture, furnishings,
fixtures or equipment therein or alterations or improvements thereto, whether or
not required, shall include provisions which either designate the other party as
one of the insured or deny to the insurer acquisition by subrogation of rights
of recovery against the other party to the extent such rights have been waived
by the insured party prior to
<PAGE>
-5-
occurrence of loss or injury, insofar as, and to the extent that such provisions
may be effective without making it impossible to obtain insurance coverage from
responsible companies qualified to do business in the State of Florida (even
though extra premium may result therefrom) and without voiding the insurance
coverage in force between the insurer and the insured party. Each party shall be
entitled to have duplicates or certificates of any policies containing such
provisions. Each party hereby waives all rights of recovery against the other
for loss or injury against which the waiving party is protected by insurance
containing said provisions, reserving, however, any rights with respect to any
excess of loss or injury over the amount recovered by such insurance.
4.3.3 Utilities. Tenant shall pay directly to the proper authorities
---------
charged with the collection thereof all charges for water, sewer, gas,
electricity, telephone and other utilities or services used or consumed on the
Premises, whether called charge, tax, assessment, fee or otherwise, including,
without limitation, water and sewer use charges and taxes, if any, all such
charges to be paid as the same from time to time become due. If Tenant is not
charged directly by the respective utility for any of such utilities or
services, Tenant shall from time to time, within ten (10) days of receipt of
Landlord's invoice therefor, pay to Landlord the total of such charges for the
Premises. It is understood and agreed that Tenant shall make its own
arrangements for such utilities and that Landlord shall be under no obligation
to furnish any utilities to the Premises and shall not be liable for any
interruption or failure in the supply of any such utilities to the Premises.
ARTICLE V
Tenant's Additional Covenants
-----------------------------
5.1 Affirmative Covenants. Tenant covenants at its expense at all times
----------- ---------
during the term and for such further time as Tenant occupies the Premises or any
part thereof:
5.1.1 Perform Obligations. To perform promptly all of the
------- -----------
obligations of Tenant set forth in this Lease; and to pay when due the Fixed
Rent and Additional Rent and all charges, rates and other sums which by the
terms of this Lease are to be paid by Tenant.
5.1.2 Use. From time to time to procure at Tenant's sole expense all
---
licenses and permits necessary for use of the Premises.
<PAGE>
-6-
5.1.3 Repair and Maintenance. To keep the Premises including the
------ --- -----------
heating, plumbing, electrical, air-conditioning and mechanical systems, the
exterior walls, glass and doors, roof, foundation and structural elements of the
Building, in good order, condition and repair, fire and other casualty (which
shall be governed by the provisions of Article VI of this Lease) and reasonable
use and wear only excepted; and to make all repairs and replacements and to do
all other work necessary for the foregoing purposes.
5.1.4 Compliance with Law. To comply with all laws and governmental
---------- ---- ---
regulations, to make all repairs, alterations, additions or replacements to the
Premises required by any law or ordinance or any order or regulation of any
public authority arising from Tenant's use of the Premises; to keep the Premises
equipped with all safety appliances so required; or against personal property of
any kind on or about the Premises; not to dump, flush, or in any way introduce
any hazardous substances or any other toxic substances into the septic, sewage
or other waste disposal system serving the Premises, not to generate, store or
dispose of hazardous substances in or on the Premises or dispose of hazardous
substances from the Premises to any other location except in compliance with all
applicable federal, state and or local statutes, ordinances, bylaws, codes,
rules and/or regulations, now or hereafter enacted, pertaining to any aspect of
the environment or human health, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. (S)6901, et seq., the Resource Conservation and Recovery Act of 1976, as
amended, 42 U.S.C. (S)6901 et seq., the Federal Water Pollution Control Act, the
Federal Clean Air Act (collectively, the "Environmental Laws"), and all other
applicable codes, regulations, ordinances and laws; and to comply with the
orders and regulations of all governmental authorities with respect to zoning,
building, fire, health and other codes, regulations, ordinances or laws
applicable to the Premises. For purposes of this Section, "hazardous
substances" shall mean any oil, "hazardous material", "hazardous waste" or
"hazardous substance" as the foregoing terms are defined in the Environmental
Laws.
5.1.5 Requirements for Tenant's Work. To procure at Tenant's sole
------------ --- -------- ----
expense all necessary permits and licenses before undertaking any work on the
Premises; to do all such work in a good and workmanlike manner employing
materials of good quality and so as to conform with all applicable zoning,
building, fire, health and other codes, regulations, ordinances and laws.
Landlord shall consent, with such consent not to be unreasonably withheld, to or
join in all accurate
<PAGE>
-7-
applications or permits needed by Tenant to perform any of Tenant's Work, all in
accordance with the proceeding provisions of this Section 5.1.5.
5.1.6 Indemnity. To defend, with counsel approved by Landlord, all
---------
actions against Landlord, any partner, trustee, stockholder, officer, director,
employee or beneficiary of Landlord, holders of mortgages secured by the
Premises and any other party having an interest in the Premises (Indemnified
Parties) with respect to, and to pay, protect, indemnify and save harmless, to
the extent permitted by law, all Indemnified Parties from and against, any and
all liabilities, losses, damages, costs, expenses (including reasonable
attorneys' fees and expenses), causes of action, suits, claims, demands or
judgments of any nature (a) to which any Indemnified Party is subject because of
its estate or interest in the Premises, or (b) arising from (i) injury to or
death of any person, or damage to or loss of property, on the Premises or on
adjoining sidewalks, streets or ways, or connected with the use, condition or
occupancy of any thereof, or (ii) any act, fault, omission, or other misconduct
of Tenant or its agents, contractors, licensees, sublessees or invitees.
5.1.7 Personal Property at Tenant's Risk. All of the furnishings,
-------- -------- -- -------- ----
fixtures, equipment, effects and property of every kind, nature and description
of Tenant and of all persons claiming by, through or under Tenant which, during
the continuance of this Lease or any occupancy of the Premises by Tenant or
anyone claiming under Tenant, may be on the Premises, shall, as between the
parties, be at the sole risk and hazard of Tenant.
5.2 Assignment and Subletting. Tenant may not, without Landlord's prior
---------- --- ----------
written consent, assign, transfer, mortgage or pledge this Lease or grant a
security interest in Tenant's rights hereunder, or sublease (which term shall be
deemed to include the granting of concessions and licenses and the like, but
nothing herein shall prohibit the installation of customary vending machines)
all or any part of the Premises.
5.3 Entry by Landlord. Tenant shall permit Landlord and its authorized
----- -- --------
representatives to enter the Premises at all reasonable times for all reasonable
purposes, including but not limited to inspection, maintenance or the making of
repairs.
<PAGE>
-8-
ARTICLE VI
Casualty or Taking
------------------
6.1 Termination. During the Term if any portion of the Premises shall be
-----------
taken by any public authority or for any public use or destroyed by the action
of any public authority (hereinafter referred to as "Taking"), Tenant shall
continue to pay the Fixed Rent and the Additional Rent as if there had been no
Taking.
6.2 Restoration. In case during the ") Term the Premises shall be
-----------
destroyed or damaged by fire or casualty (hereinafter referred to as "Casualty")
Tenant shall continue to pay the Fixed Rent and the Additional Rent as if there
had been no such Casualty.
6.3 Award. Provided that an Event of Default has not occurred and is
-----
continuing, irrespective of the form in which recovery may be had by law, all
rights to damages or compensation shall belong to Tenant in all cases. Landlord
hereby grants to Tenant all of Landlord's rights to such damages and
compensation and covenants to deliver such further assignments thereof as Tenant
may from time to time request.
ARTICLE VII
Defaults
--------
7.1 Events of Default. An event of default ("Event of Default shall occur
------ -- ------- ----- -- -------
if: (a) Tenant shall default in the performance of any of its obligations to
pay the Fixed Rent or Additional Rent hereunder and if such default shall
continue for ten (10) days after written notice from Landlord to Tenant, or (b)
within thirty (30) days after notice from Landlord to Tenant specifying any
other default or defaults, Tenant has not commenced diligently to correct the
default or defaults so specified or has not thereafter diligently pursued such
correction to completion, or (c) Tenant abandons the Premises, or (d) Tenant
permits the appointment of a receiver to take possession of Tenant's assets.
7.2 Remedies. In the event that an Event of Default occurs under this
--------
Lease, Landlord shall have all remedies available under Florida law, including
termination of this Lease, in which case all Fixed Rent and Additional Rent
unpaid for the balance of the Lease Term shall become immediately due and
payable. In the alternative, at Landlord's sole
<PAGE>
-9-
option, Tenant covenants after any such termination to pay punctually to
Landlord all the sums and to perform all the obligations which Tenant covenants
in this Lease to pay and to perform in the same manner and to the same extent
and at the same time as if this Lease had not been terminated, including,
without limitation, the payment of all Fixed Rent and Additional Rent. In
calculating the amounts to be paid by Tenant pursuant to the preceding sentence,
Tenant shall be credited with any amount paid to Landlord as compensation as in
this Section 7.2 provided and also with the net proceeds of any rent obtained by
Landlord by reletting the Premises, if any, after deducting all Landlord's
reasonable expenses in connection with such reletting, including, without
limitation, all repossession costs, brokerage commissions, fees for legal
services and expenses of preparing the Premises for such reletting, it being
agreed by Tenant that Landlord may (i) relet the Premises or any part or parts
thereof for a term or terms which may at Landlord's option be equal to or less
than or exceed the period which would otherwise have constituted the balance of
the term hereof and may grant such concessions and free rent as Landlord in its
reasonable judgment considers advisable or necessary to relet the same and (ii)
make such alterations, repairs and decorations in the Premises as Landlord in
its reasonable judgment considers advisable or necessary to relet the same, and
no action of Landlord in accordance with the foregoing or failure to relet or to
collect rent under reletting shall operate or be construed to release or reduce
Tenant's liability as aforesaid.
7.3 Remedies Cumulative. Except as otherwise expressly provided herein,
-------- ----------
any and all rights and remedies which Landlord may have under this Lease, and at
law and equity, shall be cumulative and shall not be deemed inconsistent with
each other, and any two or more of all such rights and remedies may be exercised
at the same time insofar as permitted by law.
7.4 Landlord's Right to Cure Defaults. Landlord may, but shall not be
---------- ----- -- ---- --------
obligated to, cure, at any time following ten (10) days' prior notice to Tenant
(except in cases of emergency when no notice shall be required), any default by
Tenant under this Lease; and whenever Landlord so elects, all costs and expenses
incurred by Landlord, including reasonable attorneys' fees, in curing a default
shall be paid by Tenant to Landlord as Additional Rent on demand, together with
interest thereon at the rate provided in Section 7.6 from the date of payment by
Landlord to the date of payment by Tenant.
7.5 Effect of Waivers of Default. Any consent or permission by Landlord
------ -- ------- -- -------
to any act or omission which otherwise would be a breach of any
<PAGE>
-10-
covenant or condition herein, or any waiver by Landlord of the breach of any
covenant or condition herein, shall not in any way be held or construed (unless
expressly so declared in writing by Landlord) to operate so as to impair the
continuing obligation of any covenant or condition herein, or otherwise, except
as to the specific instance, operate to permit similar acts or omissions.
The failure of Landlord to seek redress for violation of, or to insist upon
the strict performance of, any covenant or condition of this Lease shall not be
deemed a waiver of such violation nor prevent a subsequent act, which would have
originally constituted a violation, from having all the force and effect of an
original violation. The receipt by Landlord of rent with knowledge of the
breach of any covenant of this Lease shall not be deemed to have been a waiver
of such breach by Landlord. No consent or waiver, express or implied, by
Landlord to or of any breach of any agreement or duty shall be construed as a
waiver or consent to or of any other breach of the same or any other agreement
or duty.
7.6 Interest on Overdue Sums. If Tenant fails to pay Fixed Rent,
-------- -- ------- ----
Additional Rent and other charges payable by Tenant to Landlord within two
business days after the due date thereof, the amount so unpaid shall bear
interest at a rate (the "Delinquency Rate") equal to three percent (3%) in
excess of the Base Rate of The First National Bank of Boston, so-called, from
time to time in effect or, if such rate is in excess of any maximum interest
rate permissible under applicable law, the Delinquency Rate shall be the maximum
interest rate permissible under applicable law, commencing with the due date and
continuing through the day preceding the date on which payment of such
delinquent payment with interest thereon is paid.
ARTICLE VIII
Purchase Agreement
------------------
8.1 Purchase Agreement. Subject to the terms, covenants and conditions
-------- ---------
hereinafter set forth in this Article VIII, Landlord shall convey the Premises
to Tenant on the Expiration Date.
8.2 Sale Provisions. Landlord shall sell and Tenant shall buy the
---- ----------
Premises upon the terms set forth in this Section 8.2:
<PAGE>
-11-
8.2.1 Premises Included. Included in the sale as part of the
-------- --------
Premises are all improvements and the fixtures belonging to Landlord and used in
connection therewith, including, if any, all furnaces, heaters, heating
equipment, oil and gas burners and fixtures appurtenant thereto, air
conditioning equipment and ventilators, hot water heaters, plumbing fixtures,
fences, gates, trees, shrubs and plants.
8.2.2 Title. The Premises shall be conveyed by a good and sufficient
-----
warranty deed running to Tenant, or to the nominee designated by Tenant, and
such deed shall convey a good and clear record and marketable title thereto,
free from all encumbrances except,
(a) provisions of existing building, zoning and environmental
laws; and
(b) any matters of record title existing as of the Execution
Date of this Lease which are set forth in Title Commitment 864-120139 of
Commonwealth Land Title Insurance Company dated as of July 17, 1996 with respect
to the Premises (Landlord acknowledges that any mortgages, liens, attachments,
levies or judgments of Landlord securing monetary obligations shall be released
in connection with such conveyance);
8.2.3 Purchase Price. The Purchase Price for the Premises shall be
-------- -----
Two Million Four Hundred Thousand Dollars ($2,400,000) as adjusted pursuant to
Section 8.2.4 hereof, plus any unpaid Fixed Rent, Additional Rent or other
unpaid obligation of Tenant or any unpaid obligation of AmeriTruck Distribution
Corp. to Landlord or Ronald N. Damico or Sandra L. Damico in connection with the
Stock Purchase Agreement (as defined in Section 8.2.4 below). The Purchase
Price shall be paid at the time of delivery of the deed by certified check or
wire transfer of federal funds to such bank account as Landlord shall designate.
8.2.4 Adjustments. In connection with the Stock Purchase Agreement,
-----------
dated as of August, 1996 (the "Stock Purchase Agreement"), among AmeriTruck
----- -------- ---------
Distribution Corp., a Delaware corporation ("AmeriTruck"), Landlord and Ronald
----------
N. Damico, Tenant shall be entitled to reduce the Purchase Price by the total
amount of Losses (as defined in the Stock Purchase Agreement) attributable to
any Largo Site Claims (as defined in the Stock Purchase Agreement), including
all costs of remedial or investigative work performed subsequent to August 16,
1996. In the event that the Tenant reduces the Purchase Price payable for the
Premises to reflect Largo Site Claims in
<PAGE>
-12-
the nature of costs to be incurred in the future in connection with known
conditions at or relating to the Premises, if such costs are never actually
incurred the Tenant shall pay to Landlord that portion of the Purchase Price
withheld plus interest at a rate of 8% per annum from the date the reduced
Purchase Price was actually paid to the date the withheld portion of the
Purchase Price is actually paid.
8.2.5 As-Is; Where-Is. Subject to the provisions of the Stock
----- --------
Purchase Agreement, Landlord has made no covenant, representation or warranty as
to the suitability of the Premises for any purpose whatsoever or as to the
physical condition of the Premises or relating to the legal, environmental, land
use or other condition or status of the Premises. Subject to the provisions of
the Stock Purchase Agreement, the Premises will be conveyed "AS IS", "WHERE IS",
"WITH ALL FAULTS" and "SUBJECT TO ALL DEFECTS." ALL IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED.
8.2.6 Inability to Convey. If Landlord shall be unable to give title
--------- -- ------
or to make conveyance or to deliver possession of the Premises, all as herein
stipulated, then, at the option of either party, all obligations of all parties
under this Section 8.2 shall cease and this Section 8.2 shall be void without
recourse to the parties hereto.
8.2.7 Acceptance of Title. If Landlord is unable to comply with
---------- -- -----
Section 8.2.2, Tenant shall have the election to accept such title as Landlord
can deliver to the Premises in its then condition and to pay therefor the
Purchase Price without deduction, in which case Landlord shall convey such
title.
8.2.8 Acceptance of Deed. The offer by Landlord and acceptance of a
---------- -- ----
deed by Tenant or its nominee, as the case may be, shall be deemed to be a full
performance and discharge of every agreement and obligation contained or
expressed in this Section 8.2.
8.2.9 Use of Purchase Money. To enable Landlord to make conveyance
--- -- -------- -----
as herein provided, Landlord may, at the time of delivery of the deed, use the
purchase money or any portion thereof to clear the title of any or all
encumbrances or interests.
8.2.10 Apportionments. Rent under this Lease shall be apportioned as
--------------
of the Closing Date. As Tenant is responsible for all taxes and utilities under
this Lease, there should be no need for additional apportionments on the Closing
Date; however, if the Landlord has prepaid
<PAGE>
-13-
any taxes or utilities or paid any of the same on behalf of Tenant, there shall
be an appropriate adjustment in Landlord's favor on the Closing Date.
8.2.11 Closing Costs. At Closing of Tenant's purchase of the
------- -----
Premises, Landlord and Tenant shall each pay closing costs in accordance with
the standards set forth in the then-applicable version of the purchase and sale
of real estate contract approved by the Florida Bar/Florida Board of Realtors.
ARTICLE IX
Miscellaneous Provisions
------------------------
9.1 Notices from One Party to the Other. All notices required or
------- ---- --- ----- -- --- -----
permitted hereunder shall be in writing and addressed, if to Tenant, at the
Original Address of Tenant or such other address as Tenant shall have last
designated by notice in writing to Landlord and, if to Landlord, at the Original
Address of Landlord or such other address as Landlord shall have last designated
by notice in writing to Tenant. Any notice shall be deemed duly given three
days after mailing to such address postage prepaid, registered or certified
mail, return receipt requested, or when delivered to such address by hand.
9.2 Quiet Enjoyment. Landlord agrees that upon Tenant's paying the rent
----- ---------
and performing and observing the terms, covenants, conditions and provisions on
its part to be performed and observed, Tenant shall and may peaceably and
quietly have, hold and enjoy the Premises during the term without any manner of
hindrance or molestation from Landlord or anyone claiming under Landlord,
subject, however, to the terms of this Lease.
9.3 Lease Not to be Recorded. Tenant agrees that it will not record this
----- --- -- -- --------
Lease. Both parties shall, upon the request of either, execute, deliver and
record a notice of this Lease in such form, if any, as may be permitted by
applicable statute. If this Lease is terminated before the originally scheduled
expiration of the term, the parties shall execute, deliver and record an
instrument acknowledging such fact and the actual date of termination of this
Lease, and Tenant hereby appoints Landlord its attorney-in-fact, coupled with an
interest, with full power of substitution to execute such instrument.
9.4 Landlord's Default. Landlord shall not be deemed to be in default in
---------- -------
the performance of any of its obligations hereunder unless it
<PAGE>
-14-
shall fail to perform such obligations and unless within thirty (30) days after
notice from Tenant to Landlord specifying such default Landlord has not
commenced diligently to correct the default so specified or has not thereafter
diligently pursued such correction to completion, Tenant shall have no right,
for any default by Landlord, to offset or counterclaim against any rent due
hereunder.
9.5 Signage. Tenant may, at Tenant's sole cost and expense, erect or
-------
place identifying signs or logos on the Building or the Premises.
9.6 Brokerage. Each of Tenant and Landlord warrants and represents to the
---------
other that it has had no dealings with any broker or agent in connection with
this Lease other than the Broker set forth in Article I and covenants to defend
with counsel approved by the other, hold harmless and indemnify the other from
and against any and all cost, expense or liability for any compensation,
commissions and charges claimed by any broker or agent other than the Broker set
forth in Article I with respect to its dealings in connection with this Lease or
the negotiation thereof.
9.7 Applicable Law and Construction. This Lease shall be governed by and
---------- --- --- ------------
construed in accordance with the laws of the State of Florida. If any term,
covenant, condition or provision of this Lease or the application thereof to any
person or circumstances shall be declared invalid, or unenforceable by the final
ruling of a court of competent jurisdiction having final review, the remaining
terms, covenants, conditions and provisions of this Lease and their application
to persons or circumstances shall not be affected thereby and shall continue to
be enforced and recognized as valid agreements of the parties, and in the place
of such invalid or unenforceable provision, there shall be substituted a like,
but valid and enforceable provision which comports to the findings of the
aforesaid court and most nearly accomplishes the original intention of the
parties.
There are no prior oral or written agreements between Landlord and Tenant
affecting this Lease. This Lease may be amended, and the provisions hereof may
be waived or modified, only by instruments in writing executed by Landlord and
Tenant.
The titles of the several Articles and Sections contained herein are for
convenience only and shall not be considered in construing this Lease.
Unless repugnant to the context, the words "Landlord" and "Tenant"
appearing in this Lease shall be construed to mean those named
<PAGE>
-15-
above and their respective heirs, executors, administrators, successors and
assigns, and those claiming through or under them respectively. If there be more
than one tenant the obligations imposed by this Lease upon Tenant shall be joint
and several.
9.8 Submission Not an Offer. The submission of a draft of this Lease or a
---------- --- -- -----
summary of some or all of its provisions does not constitute an offer to lease
or demise the Premises, it being understood and agreed that neither Landlord nor
Tenant shall be legally bound with respect to the leasing of the Premises unless
and until this Lease has been executed by both Landlord and Tenant and a fully
executed copy delivered.
9.9 Effect of Stock Purchase Agreement. In the event of any conflict
------ -- ----- -------- ---------
between the provisions of this Lease and the Stock Purchase Agreement, the
provisions of the Stock Purchase Agreement shall prevail. The provisions of
this Lease are not intended to modify or waive any of the Landlord's or Ronald
Damico's obligations under the Stock Purchase Agreement. Without limiting the
generality of the foregoing, any Environmental Claims (including any Largo Site
Claims) will be subject to the Landlord's and Mr. Damico's remediation and other
indemnification obligations provided for in Sections 12.1 to 12.5 of the Stock
Purchase Agreement, notwithstanding any provision in this Lease express or
implied to the contrary. The Landlord agrees that Tenant is an intended
beneficiary of Sections 12.1 to 12.5 of the Stock Purchase Agreement.
9.10 Time of Essence. Time is of essence of this Lease.
---- -- -------
<PAGE>
-16-
WITNESS the execution hereof under seal as of the day and year first above
written.
Tenant:
KTL, INC.
By:____________________________________
Name:
Title:
Landlord:
GRAND HOPE INVESTMENTS,
INC.
By:____________________________________
Name:
Title:
<PAGE>
EXHIBIT C
ALLONGE TO MORTGAGE NOTE
------------------------
THIS ALLONGE TO MORTGAGE NOTE (the "Allonge") is made and entered into this
23rd day of August, 1996 by and among KTL, Inc., a Florida corporation (the
"Borrower"), and Ronald N. Damico and Sandra Damico (the "Lenders"), and is
firmly affixed to and made a part of the Mortgage Note dated June 27, 1995 of
the Borrower payable to the Lenders in the principal amount of ONE MILLION ONE
HUNDRED THOUSAND DOLLARS ($1,100,000.00) (the "Note").
WHEREAS, the Borrower and the Lenders wish to modify various terms of the
Note;
NOW, THEREFORE, for consideration paid, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Maturity Date. The Maturity Date (the "Maturity Date") under the Note
-------------
was originally June 27, 2025. Effective upon the execution of this Allonge, the
entire outstanding principal balance of the Note, together with all accrued but
unpaid interest thereon and all other sums due under the Note, shall be due and
payable hereunder, on the new Maturity Date of February 23, 1998.
2. Interest Rate. Commencing on August 23, 1996, interest only shall be
-------------
charged on the outstanding principal balance at an annual rate of eight percent
(8%). During the period from June 27, 1995 until and including August 22, 1996,
to the extent not previously paid no interest shall be charged and/or accrued
with respect to the outstanding principal balance and the Lenders hereby waive
any and all rights and/or claims to any interest payments with respect to such
period. The Lenders acknowledge that the amendments to the interest provisions
of the Note were agreed to in part in exchange for the restructuring of the
Maturity Date. No amortization payments shall be due between the execution of
this Allonge and the new Maturity Date.
3. No Other Amendments. Except as expressly provided for in this Allonge,
-------------------
all of the terms, conditions, and provisions of the Note shall remain in full
force and effect and unchanged.
IN WITNESS WHEREOF, the Borrower and the Lenders have executed this Allonge
as an instrument under seal as of the date first above written.
KTL, INC.
By: _____________________________________
Name:
Title:
_________________________________________
Ronald N. Damico
_________________________________________
Sandra Damico
<PAGE>
FIRST AMENDMENT TO MORTGAGE
This FIRST AMENDMENT TO MORTGAGE (this "Amendment") is made as of the ___
day of August, 1996 by and among KTL, INC., a Florida corporation (the
"Mortgagor") and RONALD N. DAMICO and SANDRA DAMICO (the "Mortgagees").
WHEREAS, the Mortgagor executed and delivered to the Mortgagees that
certain Mortgage dated as of June 27, 1995 which was recorded July 3, 1995 in
the Office of the Clerk of Camden County, New Jersey in Mortgage Book 4377, Page
781 with respect to the premises more particularly described therein (the
"Mortgage");
WHEREAS, the Mortgagor and the Mortgagees have executed an Allonge to
Mortgage Note amending the Mortgage Note secured by the Mortgage; and
WHEREAS, the Mortgagor and the Mortgagees wish to have the Mortgage secure
the Mortgage Note as amended by the Allonge to Mortgage Note;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. All references to "note" or "promissory note" shall refer to the
Mortgage Note as amended by the Allonge to Mortgage Note.
2. Except as expressly amended herein, all of the terms and conditions of
the Mortgage remain unchanged and in full force and effect.
<PAGE>
-2-
IN WITNESS WHEREOF, the Mortgagor and the Mortgagees have caused this
Amendment to be signed, acknowledged and delivered in their names and on their
behalf as of the date first above written.
Signed, sealed and delivered KTL, INC.
in the presence of:
__________________________ By:__________________________________
Name:
__________________________ Title:
Attested to:
__________________________
Name:
Title:
Signed, sealed and delivered _____________________________________
in the presence of: Ronald N. Damico
___________________________
__________________________
Signed, sealed and delivered _____________________________________
in the presence of: Sandra Damico
__________________________
__________________________
<PAGE>
-3-
STATE OF _____________
COUNTY OF ______________
I hereby certify that on August ___, 1996, before me, the undersigned
authority, personally appeared __________________ and __________________,
officers of KTL, Inc., a Florida corporation, to me well known or proven to be
the individuals described herein and who executed the foregoing instrument and
acknowledged before me that they executed the same for the purposes herein
expressed.
_____________________________________
Notary Public
My Commission expires:
STATE OF _____________
COUNTY OF ______________
I hereby certify that on August ___, 1996, before me, the undersigned
authority, personally appeared Ronald N. Damico, to me well known or proven to
be the individual described herein and who executed the foregoing instrument and
acknowledged before me that he executed the same for the purposes herein
expressed.
_____________________________________
Notary Public
My Commission expires:
STATE OF _____________
COUNTY OF ______________
I hereby certify that on August ___, 1996, before me, the undersigned
authority, personally appeared Sandra Damico, to me well known or proven to be
the individual described herein and who executed the foregoing instrument and
acknowledged before me that she executed the same for the purposes herein
expressed.
Notary Public
My Commission expires:
<PAGE>
EXHIBIT D
Instrument of Accession
---------- -- ---------
Reference is made to that certain Stockholder Agreement dated as of
November 15, 1995, a copy of which is attached hereto (as amended and in effect
from time to time, the "Stockholder Agreement"), among AmeriTruck Distribution
----------- ---------
Corp., a Delaware corporation (the "Company"), and the Stockholders of the
-------
Company (as defined therein).
The undersigned, Ronald N. Damico, in order to become the owner or
holder of 225,000 shares of the Class A Voting Common Stock, $0.01 par value per
share (the "Shares"), of the Company hereby agrees that by his execution hereof
------
(a) the undersigned makes each of the representations and warranties made in the
Stockholder Agreement by the Investors and Individual Stockholders as to
himself, (b) the undersigned is a Stockholder and Investor and Individual
Stockholder party to the Stockholder Agreement subject to all of the
restrictions and conditions applicable to Stockholders and Investors and
Individual Stockholders set forth in such Stockholder Agreement, and (c) all of
the Shares (and any and all shares of stock of the Company issued in respect
thereof) constitute Investor Stock subject to all the restrictions and
conditions applicable to Restricted Shares and shares of Investor Stock and
Management Stock as set forth in the Stockholder Agreement. This Instrument of
Accession shall take effect and shall become a part of said Stockholder
Agreement immediately upon execution.
Executed as of the date set forth below under the laws of the State of
Delaware.
Signature: _____________________________
Ronald N. Damico
Address: 10530 Vonn Road
Largo, FL 34644
Date: August ___, 1996
Accepted:
AMERITRUCK DISTRIBUTION CORP.
By:__________________________
Date: August ___, 1996
<PAGE>
Instrument of Accession
---------- -- ---------
Reference is made to that certain Registration Rights dated as of
November 15, 1995, a copy of which is attached hereto (as amended and in effect
from time to time, the "Registration Rights Agreement"), among AmeriTruck
------------ ------ ---------
Distribution Corp., a Delaware corporation (the "Company"), and the Holders
-------
(as defined therein).
The undersigned, Ronald N. Damico, in order to become the owner or holder
of 225,000 shares of the Class A Voting Common Stock, $0.01 par value per share
(the "Shares"), of the Company hereby agrees that by his execution hereof the
------
undersigned is an Investor and Holder party to the Registration Rights Agreement
subject to all of the restrictions and conditions applicable to Investors and
Holders set forth in such Registration Rights Agreement, and all of the Common
Stock purchased by the undersigned in connection herewith (and any and all
shares of stock of the Company issued in respect thereof) are subject to all the
restrictions and conditions appicable to the shares of Common Stock as set forth
in the Registration Rights Agreement. This Instrument of Accession shall take
effect and shall become a part of said Registration Rights Agreement immediately
upon execution.
Executed as of the date set forth below under the laws of the State of
Delaware.
Signature: ________________________
Ronald N. Damico
Address: 10530 Vonn Road
Largo, FL 34644
Date: August ___, 1996
Accepted:
AMERITRUCK DISTRIBUTION CORP.
By:__________________________
Date: August ___, 1996
<PAGE>
EXHIBIT E
STULL & BARBER, P.A.
ATTORNEYS AND COUNSELORS AT LAW
602 SOUTH BOULEVARD
TAMPA, FLORIDA 33606
TELEPHONE (813) 251-3914
FAX (813) 251-0974
August 23, 1996
AmeriTruck Distribution Corp.
301 Commerce Street, Suite 1101
Fort Worth, Texas 76102
Re: KTL, Inc.
---------
Ladies and Gentlemen:
We have acted as counsel to Ronald N. Damico (the "Seller"), KTL, Inc., a
------
Florida corporation ("KTL"), and Grand Hope Investments, Inc., a Florida
---
corporation ("Grand Hope"), in connection with the transactions contemplated by
----------
the Stock Purchase Agreement, dated as of August 23, 1996 (the "Purchase
--------
Agreement"), by and among AmeriTruck Distribution Corp., a Delaware Corporation
- ---------
(the "Buyer"), the Seller and Grand Hope, pursuant to which the Buyer has agreed
-----
to purchase all of the outstanding capital stock of KTL from the Seller and
cause KTL to lease a certain parcel of real estate from Grand Hope. This
opinion is being delivered to you pursuant to Section 8.5 of the Purchase
Agreement. All capitalized terms that are used herein without definition have
the meanings set forth for such terms in the Purchase Agreement. KTL, Grand
Hope and the Seller are sometimes referred to below as the "Selling Parties."
---------------
In connection with the rendering of this opinion, we have reviewed
originals or copies of each of the Purchase Agreement, the Employment and Non-
Competition Agreements, and the Largo Lease (referred to hereinafter
collectively as the "Acquisition Agreements"), copies of the charter documents
----------------------
and by-laws of KTL and Grand Hope, resolutions of the Board of Directors of KTL
and Grand Hope authorizing and/or ratifying the transactions contemplated by the
Acquisition Agreements and such other documents as we have deemed necessary or
appropriate for purposes of this opinion.
<PAGE>
AmeriTruck Distribution Corp.
August 23, 1996
Page 2
As to all matters of fact (including factual conclusion and
characterizations and descriptions of purpose, intention or other states of
mind), we have relied entirely upon representations made to us by the Seller and
the officers of KTL and Grand Hope and have assumed, without independent
inquiry, the accuracy of such representations.
As to any opinion below relating to the organization, existence,
qualification or standing of KTL and/or Grand Hope in any jurisdiction, our
opinion relies entirely upon and is limited by those certificates of public
officials attached hereto as Exhibit I.
---------
We have assumed the genuineness of all signatures, the conformity to the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document.
When an opinion set forth below is given to the best of our knowledge, or
to our knowledge, or with reference to matters of which we are aware or which
are known to us, or with another similar qualification, the relevant knowledge
or awareness is limited to our actual knowledge or awareness we have gained
through participation in the specific transactions to which this opinion relates
and without any special or additional investigation undertaken for the purposes
of this opinion.
Each opinion set forth below relating to the enforceability of any
agreement or instruction against the is Seller, KTL and/or Grand Hope is subject
to the following general qualifications:
(i) as to any agreement to which any of the Sellers, KTL and/or Grand
Hope is a party, we assume that such agreement is the binding
obligation of each other party thereto;
(ii) as to any agreement or instrument to which any of the Seller, KTL
and/or Grand Hope is a party, we assume that each of the Seller, KTL
and/or Grand Hope, has received the agreed-to consideration
therefor;
(iii) the enforceability of any obligation of any of the Seller, KTL
and/or Grand Hope may be limited by bankruptcy, insolvency,
<PAGE>
Ameritruck Distribution Corp.
August 23, 1996
Page 3
fraudulent conveyance, reorganization, moratorium, marshalling or
other laws and rules of law affecting the enforcement generally of
creditors' rights and remedies (including such as may deny giving
effect to waivers of debtors' or guarantors' rights);
(iv) no opinion is given herein as to the availability of any special or
equitable relief of any kind;
(v) the enforcement of any of your rights may in all cases be subject to
an implied duty of good faith and to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding at law or in equity);
We express no opinion as to the applicability of the antitrust laws of the
United States of America or of any state, including but not limited to the H-S-R
Act, to any of the transactions contemplated by the Purchase Agreement.
Subject to the limitations set forth above and below, we have made such
examination of law as we have deemed necessary for purposes of this opinion.
This opinion is limited solely to the laws of the State of Florida as applied by
courts located therein and the federal laws of the United States of America, to
the extent that the same may apply to or govern such transactions.
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
Based upon the foregoing, we are of the opinion that:
1. Each of KTL and Grand Hope is a corporation duly organized, validly
existing and in corporate good standing under the laws of the State of Florida.
2. Each of KTL and Grand Hope has the corporate power, to enter into the
Acquisition Agreements to which it a party and to consummate the transactions
contemplated thereby. The execution and delivery of the Acquisition Agreements
to which it is a party by each of KTL and Grand Hope and the consummation of the
transactions
<PAGE>
AmeriTruck Distribution Corp.
August 23, 1996
Page 4
contemplated hereby have been duly authorized by all required corporate action
on the part of each of KTL and Grand Hope.
3. The authorized capital stock of KTL consists of [10,000 shares of
Common Stock, $1.00 par value per share (the "KTL Stock")]. [915] shares of KTL
---------
Stock, which is all of the issued and outstanding capital stock of KTL, are
outstanding of record, all of which are duly authorized and validly issued,
fully paid and non-assessable and are owned of record by the Seller and, to our
knowledge, beneficially owned by the Seller. To the best of our knowledge,
there are no outstanding options, warrants or other rights to subscribe for or
purchase any securities of KTL.
4. The Acquisition Agreements have been duly executed and delivered by
each of the Selling Parties thereto and constitutes the legal. valid and binding
obligation of each of the Selling Parties thereto in accordance with their
terms.
5. Neither the execution nor the delivery by each of the Selling Parties
thereto of any of the Acquisition Agreements nor the consummation by each of the
Selling Parties thereto of the transactions contemplated thereby will constitute
a violation of, or be in conflict with, constitute or create a default under, or
result in the creation or imposition of any liens upon any property of any of
the Selling Parties pursuant to: (i) the [Articles of Organization] or By-Laws
of each of KTL and Grand Hope, each as amended to date; (ii) to our knowledge,
any agreement or commitment to which any of the Selling Parties is a party or by
which any of the Selling Parties or any of their properties is bound or to which
any of the Selling Parties or any of their properties is subject; or (iii) any
Florida or federal statute or regulation or rule relating to any of the Selling
Parties (except for the securities or "Blue Sky" laws of any state other than
the State of Florida, as to which we express no opinion).
6. Except for (i) the filings and approvals referred to in Schedules 4.7
--------- ---
and 5.5 to the Purchase Agreement, or (ii) any filing and recording of documents
---
normally required in connection with the conveyance of title to personal and
real property or Intellectual Property, no approval or consent or other action
by, and no filing or registration with, any agency, authority or other unit of
the State of Florida or of the federal government of the United States of
America is required under existing law or regulations as a condition to the
valid execution, delivery
<PAGE>
AmeriTruck Distribution Corp.
August 23, 1996
Page 5
and performance by each of the Selling Parties of the Acquisition Agreements to
which it is a party or the effectiveness of the transactions contemplated
thereby.
This opinion has been delivered solely for your use in connection with the
transactions contemplated by the Purchase Agreement and may not be referred to
or used for any other purpose or relied upon by any other person, except with
our prior consent. The opinions expressed herein are given as of the date
hereof and we undertake no obligation thereby and disclaim any obligation to
advise you of any change after the date hereof pertaining to any matter referred
to herein.
Yours Very truly.
STULL & BARBER, P.A.
R. JEFFREY STULL
<PAGE>
EXHIBIT F
EMPLOYMENT AND NON-COMPETITION AGREEMENT
----------------------------------------
This EMPLOYMENT AND NON-COMPETITION AGREEMENT, dated as of August __, 1996,
is among KTL, Inc., a Florida corporation (the "Employer"), AmeriTruck
--------
Distribution Corp., a Delaware corporation ("AmeriTruck"), and Ronald E. Adams
----------
(the "Employee").
--------
WHEREAS, the Employee has been employed by the Employer as Vice President
of Administration;
WHEREAS, pursuant to that certain Stock Purchase Agreement, dated as of
August __, 1996 (the "Purchase Agreement"), AmeriTruck, as a condition to its
-------- ---------
obligation to acquire the Employer, has required that the Employee resign as an
officer of the Employer and that the Employer and the Employee enter into this
Agreement;
WHEREAS, AmeriTruck and the Employer wish to retain the Employee as
Executive Vice President of Administration of the Employer upon consummation of
the transactions contemplated by the Purchase Agreement by entering into an
Employment Agreement contemporaneously with such transaction on the terms set
forth below;
NOW, THEREFORE, it is hereby agreed as follows:
(S)1. EMPLOYMENT. The Employer hereby employs the Employee, and the
Employee hereby accepts employment, upon the terms and subject to the conditions
hereinafter set forth.
(S)2. DUTIES. The Employee shall be employed as the Vice President of
Administration of the Employer or in such other executive capacity as the
Employer may from time to time designate. In such capacity, the Employee shall
have the executive responsibilities and duties assigned by the Employer's Board
of Directors. The Employee agrees to devote his full time and best efforts to
the performance of his duties to the Employer.
(S)3. TERM. The initial term of employment of the Employee hereunder
shall commence on the date hereof (the "Commencement Date"), and continue until
------------ ----
November 15, 1998, unless earlier terminated pursuant to Section 6, and may be
renewed for additional one year terms thereafter, upon the mutual consent of the
parties.
(S)4. COMPENSATION AND BENEFITS. In consideration for the services of the
Employee hereunder, the Employer shall compensate the Employee as follows:
(a) Base Salary. Until the termination of the Employee's employment
---- ------
hereunder, the Employer shall pay the Employee, weekly in arrears, a base salary
(the "Base Salary"). The Base Salary will be paid at an annual rate of $130,000
---- ------
through the first twelve months of
<PAGE>
-2-
the term hereof, and may be increased thereafter at the sole discretion of the
Employer's Board of Directors.
(b) Vacation. The Employee shall be entitled to four (4) weeks of
--------
vacation time per year. Any vacation shall be taken at the reasonable and mutual
convenience of the Employer and the Employee. Accrued vacation not taken in any
calendar year will not be carried forward or used in any subsequent calendar
year.
(c) Accident, Disability and Health Insurance. Accident, disability and
-------- ---------- --- ------ ---------
health insurance for the Employee shall be provided by the Employer under a
group accident, disability and health insurance plan maintained by the Employer
for its full-time, salaried employees.
(d) Management Incentive Plan. The Employee shall be eligible to
---------- --------- ----
receive from AmeriTruck, at the end of each fiscal year of AmeriTruck during the
term hereof, an additional management incentive bonus in accordance with a
management incentive bonus plan adopted at the beginning of each fiscal year by
AmeriTruck.
(e) Stock Options. The Employee may receive options to purchase shares
----- -------
of common stock of AmeriTruck under a stock option plan adopted by the board of
directors and shareholders of AmeriTruck. Any grant of options and the terms
thereof shall be at the sole discretion of AmeriTruck's board of directors.
(f) Expense Allowance. The Employee shall receive a business expense
------- ---------
allowance of $700 per month in addition to the Base Salary.
(S)5. EXPENSES. In addition to Section 4(f), the Employer shall reimburse
the Employee for all reasonable expenses of types authorized by the Employer and
incurred by the Employee in the performance of his duties hereunder. The
Employee shall comply with such budget limitations and approval and reporting
requirements with respect to expenses as the Employer may establish from time to
time.
(S)6. TERMINATION. The Employee's employment hereunder shall commence on
the Commencement Date and continue until all of the parties' obligations
hereunder have been fulfilled, except that the employment of the Employee
hereunder shall terminate:
(a) Death or Disability. Upon the death of the Employee during the term
----- -- ----------
of his employment hereunder or, at the option of the Employer, in the event of
the Employee's disability, upon thirty days notice. The Employee shall be deemed
disabled if an independent medical doctor (selected by the Employer's health or
disability insurer) certifies that the Employee has for four (4) months,
consecutive or non-consecutive, in any twelve-month period been disabled in a
manner which seriously interferes with his ability to perform his
responsibilities under this Agreement. Any refusal by the Employee to submit to
a medical examination for the purpose of certifying disability under this
Section 6(a) shall be deemed conclusively to constitute evidence of the
Employee's disability.
<PAGE>
-3-
Upon termination of the Employee's employment pursuant to this Section
6(a), the Employee (or his duly appointed representative and family members, as
appropriate) shall be entitled to receive the management incentive bonus he
would have received, if any, for the fiscal year of AmeriTruck in which such
termination occurs, and may receive such benefits as may be provided pursuant to
any insurance coverage provided pursuant to Section 4(c) hereof, but otherwise
the Employee (or his duly appointed representative or family members, as
appropriate) shall not be entitled to any base compensation, bonus, severance
pay or other benefits.
(b) For Cause. For "Cause" immediately upon written notice by the
--- -----
Employer to the Employee. For purposes of this Agreement, a termination shall be
for Cause if (i) the Employee shall commit an act of fraud, embezzlement,
misappropriation or breach of fiduciary duty against the Employer or be
convicted by a court of competent jurisdiction of or enter a plea of guilty or
nolo contendere to any felony; or (ii) the Employee has been chronically absent
from work (excluding vacations, illnesses or leaves of absence approved by the
Employer's Board of Directors; or (iii) the Employee has refused, after explicit
written notice, to obey any lawful resolution of or direction by the Employer's
Board of Directors which is consistent with the duties incident to his
employment with the Employer; or (iv) if and when the Employee becomes a party
thereto, the Employee shall breach in any material respect any of the covenants,
terms and provisions hereof or set forth in Sections 2, 4 or 6 of the
Stockholder Agreement, dated as of November 15, 1995, among AmeriTruck and its
stockholders, a copy of which is attached hereto, and such breach shall not be
cured within 30 days after delivery of written notice to the Employee thereof.
For purposes of this Section 6, a termination by the Employee of his employment
hereunder shall be treated as a termination by the Employer for Cause. Upon
termination of the Employee's employment pursuant to this Section 6(b), the
Employee shall not be entitled to any base compensation, bonus, severance pay or
other benefits, except as may be provided pursuant to any insurance coverage
provided pursuant to Section 4(c) hereof.
(c) Without Cause. "Without Cause" immediately upon written notice by
------- -----
the Employer to the Employee, in which case the Employer will continue to pay or
provide the Base Salary as in effect prior to such termination until the longer
of (i) one year after the date of such termination or (ii) the end of the
remainder of the then current term of employment described in Section 3 hereof
if such termination occurs prior to November 15, 1997. Upon termination of the
Employee's employment pursuant to this Section 6(c), the Employee shall be
entitled to receive the management incentive bonus he would have received, if
any, for the fiscal year of AmeriTruck in which such termination occurs, the
Base Salary as outlined in the immediately preceding sentence, and any benefits
as may be provided pursuant to any insurance coverage provided pursuant to
Section 4(c) hereof; otherwise, the Employee shall not be entitled to any base
compensation, bonus, severance pay or other benefit.
(S)7. INVENTIONS; ASSIGNMENT. All rights to discoveries, inventions,
improvements and innovations (including all data and records pertaining thereto)
related to the Employer's business, whether or not patentable, copyrightable or
reduced to writing, that
<PAGE>
-4-
the Employee may discover, invent or originate during the term of his employment
hereunder, and for a period of six months thereafter, either alone or with
others and whether or not during working hours or by the use of the facilities
of the Employer ("Inventions"), shall be the exclusive property of the Employer.
----------
The Employee shall promptly disclose all Inventions to the Employer, shall
execute at the request of the Employer any assignments or other documents the
Employer may deem necessary to protect or perfect its rights therein, and shall
assist the Employer, at the Employer's expense, in obtaining, defending and
enforcing the Employer's rights therein. The Employee hereby appoints the
Employer as his attorney-in fact to execute on his behalf any assignments or
other documents deemed necessary by the Employer to protect or perfect its
rights to any Inventions.
(S)8. CONFIDENTIAL INFORMATION. The Employee recognizes and acknowledges
that certain assets of the Employer and its affiliates, including, without
limitation, information regarding customers, pricing policies, methods of
operation, proprietary computer programs, sales, products, profits, costs,
markets, key personnel, formulae, product applications, technical processes, and
trade secrets (hereinafter called "Confidential Information") are valuable,
------------ -----------
special, and unique assets of the Employer and its affiliates. The Employee
shall not, during or after his term of employment, disclose any or any part of
the Confidential Information to any person, firm, corporation, association, or
any other entity for any reason or purpose whatsoever, directly or indirectly,
except as may be required pursuant to his employment hereunder, unless and until
such Confidential Information becomes publicly available other than as a
consequence of the breach by the Employee of his confidentiality obligations
hereunder. In the event of the termination of his employment, whether voluntary
or involuntary and whether by the Employer or the Employee, the Employee shall
deliver to the Employer all documents and data pertaining to the Confidential
Information and shall not take with him any documents or data of any kind or any
reproductions (in whole or in part) of any items relating to the Confidential
Information.
(S)9. NON-COMPETITION. During the term of the Employee's employment
hereunder and upon termination of the Employee's employment hereunder during the
Applicable Restricted Period (as defined below), the Employee will not (i)
engage, anywhere within the continental United States of America, directly or
indirectly, alone or as a shareholder, partner, officer, director, employee or
consultant of any other organization in the business of specialized distribution
services by motor carrier in interstate and/or intrastate commerce, including,
time sensitive delivery, special handling, specific temperature control,
"dedicated fleets" and logistics services (the "Designated Industry") in
---------- --------
competition with the Employer or any of its affiliates, (ii) divert to any
competitor of the Employer or any of its affiliates in the Designated Industry
any customer of any of the Employer or any of its affiliates, or (iii) solicit
or encourage any officer, employee or consultant of any of the Employer or any
of its affiliates to leave its employ for employment by or with any competitor
of any of the Employer or any of its affiliates in the Designated Industry. For
purposes hereof the term "Applicable Restricted Period" shall mean, (i) with
respect to any termination of the Employee's employment hereunder for Cause
under Section 6(b) or on account of the Employee's voluntary resignation, one
year following such termination;
<PAGE>
-5-
provided that if such termination occurs prior to November 15, 1997, the
- --------
Employer may, at its option, elect to extend such Applicable Restricted Period
after the end of the initial one-year period on a month-to-month basis until
November 15, 1998 so long as the Employer resumes making payments of Base Salary
to the Employee during such extension period at the annual rate in effect on the
date of such termination and (ii) with respect to any termination of the
Employee's employment hereunder by the Employer without Cause under Section
6(c), so long as the Employer continues to make payments of the Employee's Base
Salary to Employee in accordance with the provisions of Section 6(c) hereof. The
Employee acknowledges that the provisions of this Section 9 are essential to
protect the business and goodwill of the Employer and that such provisions are
made as an inducement for AmeriTruck to enter into the Purchase Agreement and to
complete the transactions contemplated thereby. The Employee will continue to be
bound by the provisions of this Section 9 until their expiration and shall not
be entitled to any compensation from the Employer with respect thereto. If at
any time the provisions of this Section 9 shall be determined to be invalid or
unenforceable, by reason of being vague or unreasonable as to area, duration or
scope of activity, this Section 9 shall be considered divisible and shall become
and be immediately amended to only such area, duration and scope of activity as
shall be determined to be reasonable and enforceable by the court or other body
having jurisdiction over the matter; and the Employee agrees that this Section 9
as so amended shall be valid and binding as though any invalid or unenforceable
provision had not been included herein.
(S)10. GENERAL.
(a) Notices. All notices and other communications hereunder shall be
-------
in writing or by written telecommunication, and shall be deemed to have been
duly given if delivered personally or if mailed by certified written
telecommunication, to the relevant address set forth below, or to such other
address as the recipient of such notice or communication shall have specified to
the other party hereto in accordance with this Section 10(a):
If to the Employer, to:
KTL, Inc.
c/o AmeriTruck Distribution Corp.
301 Commerce, Suite 1101
Fort Worth, Texas 76102
Attention: Chairman
with a copy to:
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110-1726
Attention: John R. Utzschneider, Esq.
<PAGE>
-6-
If to the Employee, to:
Ronald E. Adams
1506 Whisper Wind Lane
Oldsmar, FL 34677
(b) Withholding. All payments by the Employer of Base Salary and other
-----------
compensation hereunder will be subject to all applicable federal, state and
local withholding tax requirements.
(c) Equitable Remedies. Each of the parties hereto acknowledges and
--------- --------
agrees that upon any breach by the Employee of his obligations under Sections 8
and 9 hereof, the Employer will have no adequate remedy at law, and accordingly
will be entitled to specific performance and other appropriate injunctive and
equitable relief.
(d) Severability. If any provision of this Agreement is or becomes
------------
invalid, illegal or unenforceable in any respect under any law, the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired.
(e) Waivers. No delay or omission by either party hereto in exercising
-------
any right, power or privilege hereunder shall impair such right, power or
privilege, nor shall any single or partial exercise of any such right, power or
privilege preclude any further exercise thereof or the exercise of any other
right, power or privilege.
(f) Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(g) Assigns. This Agreement shall be binding upon and inure to the
-------
benefit of the heirs and successors of each of the parties hereto.
(h) Entire Agreement. This Agreement contains the entire understanding
------ ---------
of the parties, supersedes all prior agreements and understandings relating to
the subject matter hereof and shall not be amended except by a written
instrument hereafter signed by each of the parties hereto.
(i) Governing Law. This Agreement and the performance hereof shall be
--------- ---
construed and governed in accordance with the laws of the State of Florida.
<PAGE>
-7-
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed as of the date and year
first above written.
KTL, INC.
By:__________________________________
Title:_______________________________
AMERITRUCK DISTRIBUTION CORP.
By:__________________________________
Title:_______________________________
_____________________________________
Ronald E. Adams
<PAGE>
EXHIBIT F
EMPLOYMENT AND NON-COMPETITION AGREEMENT
----------------------------------------
This EMPLOYMENT AND NON-COMPETITION AGREEMENT, dated as of August __, 1996,
is among KTL, Inc., a Florida corporation (the "Employer"), AmeriTruck
--------
Distribution Corp., a Delaware corporation ("AmeriTruck") and Ronald N. Damico
----------
(the "Employee").
--------
WHEREAS, the Employee has been employed by the Employer as President and
Chief Executive Officer;
WHEREAS, the Employee has entered into that certain Stock Purchase
Agreement, dated as of August __, 1996 (the "Purchase Agreement") pursuant to
-------- ---------
which the Employee and all other shareholders of the Employer shall, on the date
hereof, sell all of their shares of capital stock in the Employer to AmeriTruck
in exchange for cash and certain shares of common stock of AmeriTruck;
WHEREAS, AmeriTruck and the Employer wish to retain the Employee as
President and Chief Executive Officer of the Employer upon consummation of the
transactions contemplated by the Purchase Agreement by entering into an
Employment Agreement contemporaneously with such transaction on the terms set
forth below;
NOW, THEREFORE, it is hereby agreed as follows:
(S)1. EMPLOYMENT. The Employer hereby employs the Employee, and the
Employee hereby accepts employment, upon the terms and subject to the conditions
hereinafter set forth.
(S)2. DUTIES. The Employee shall be employed as the President and Chief
Operating Officer of the Employer or in such other executive capacity as the
Employer may from time to time designate, and shall be entitled to serve as a
Director of the Employe r during the term hereof. In such capacity, the
Employee shall have the executive responsibilities and duties assigned by the
Employer's Chairman of the Board. The Employee agrees to devote his full time
and best efforts to the performance of his duties to the Employer.
(S)3. TERM. The initial term of employment of the Employee hereunder
shall commence on the date hereof (the "Commencement Date"), and continue until
------------ ----
November 15, 1998, unless earlier terminated pursuant to Section 6, and may be
renewed for additional one year terms thereafter, upon the mutual consent of the
parties.
(S)4. COMPENSATION AND BENEFITS. In consideration for the services of the
Employee hereunder, the Employer shall compensate the Employee as follows:
<PAGE>
-2-
(a) Base Salary. Until the termination of the Employee's employment
---- ------
hereunder, the Employer shall pay the Employee, weekly in arrears, a base salary
(the "Base Salary"). The Base Salary will be paid at an annual rate of not less
---- ------
than $150,000, and may be increased thereafter at the sole discretion of the
Employer's Board of Directors.
(b) Vacation. The Employee shall be entitled to four (4) weeks of
--------
vacation time per year. Any vacation shall be taken at the reasonable and mutual
convenience of the Employer and the Employee. Accrued vacation not taken in any
calendar year will not be carried forward or used in any subsequent calendar
year.
(c) Accident, Disability and Health Insurance. Accident, disability and
-------- ---------- --- ------ ---------
health insurance for the Employee shall be provided by the Employer under a
group accident, disability and health insurance plan maintained by the Employer
for its full-time, salaried employees.
(d) Management Incentive Plan. The Employee shall be eligible to receive
---------- --------- ----
from AmeriTruck, at the end of each fiscal year of AmeriTruck during the term
hereof, an additional management incentive bonus in accordance with a management
incentive bonus plan adopted at the beginning of each fiscal year by AmeriTruck.
(e) Stock Options. The Employee may receive options to purchase shares of
----- -------
common stock of AmeriTruck under a stock option plan adopted by the board of
directors and shareholders of AmeriTruck. Any grant of options and the terms
thereof shall be at the sole discretion of AmeriTruck's board of directors.
(f) Expense Allowance. The Employee shall receive a business expense
------- ---------
allowance of $700 per month, in addition to the Base Salary.
(S)5. EXPENSES. In addition to Section 4(f), the Employer shall reimburse
the Employee for all reasonable expenses of types authorized by the Employer and
incurred by the Employee in the performance of his duties hereunder. The
Employee shall comply with such budget limitations and approval and reporting
requirements with respect to expenses as the Employer may establish from time to
time.
(S)6. TERMINATION. The Employee's employment hereunder shall commence on
the Commencement Date and continue until all of the parties' obligations
hereunder have been fulfilled, except that the employment of the Employee
hereunder shall terminate:
(a) Death or Disability. Upon the death of the Employee during the term
----- -- ----------
of his employment hereunder or, at the option of the Employer, in the event of
the Employee's disability, upon thirty days notice. The Employee shall be deemed
disabled if an independent medical doctor (selected by the Employer's health or
disability insurer) certifies that the Employee has for four (4) months,
consecutive or non-consecutive, in any twelve-month period been disabled in a
manner which seriously interferes with his ability to perform his
responsibilities under this Agreement. Any refusal by the Employee to submit to
a medical
<PAGE>
-3-
examination for the purpose of certifying disability under this Section 6(a)
shall be deemed conclusively to constitute evidence of the Employee's
disability.
Upon termination of the Employee's employment pursuant to this Section
6(a), the Employee (or his duly appointed representative and family members, as
appropriate) shall be entitled to receive the management incentive bonus he
would have received, if any, for the fiscal year of AmeriTruck in which such
termination occurs, and may receive such benefits as may be provided pursuant to
any insurance coverage provided pursuant to Section 4(c) hereof, but otherwise
the Employee (or his duly appointed representative or family members, as
appropriate) shall not be entitled to any base compensation, bonus, severance
pay or other benefits.
(b) For Cause. For "Cause" immediately upon written notice by the
--- -----
Employer to the Employee. For purposes of this Agreement, a termination shall be
for Cause if (i) the Employee shall commit an act of fraud, embezzlement,
misappropriation or breach of fiduciary duty against the Employer or be
convicted by a court of competent jurisdiction of or enter a plea of guilty or
nolo contendere to any felony; or (ii) the Employee has been chronically absent
from work (excluding vacations, illnesses or leaves of absence approved by the
Employer's Board of Directors; or (iii) the Employee has refused, after explicit
written notice, to obey any lawful resolution of or direction by the Employer's
Board of Directors which is consistent with the duties incident to his
employment with the Employer; or (iv) the Employee shall breach in any material
respect any of the covenants, terms and provisions hereof or set forth in
Sections 2, 4 or 6 of the Stockholder Agreement, dated as of November 15, 1995,
among AmeriTruck and its stockholders and such breach shall not be cured within
30 days after delivery of written notice to the Employee thereof. For purposes
of this Section 6, a termination by the Employee of his employment hereunder
shall be treated as a termination by the Employer for Cause. Upon termination of
the Employee's employment pursuant to this Section 6(b), the Employee shall not
be entitled to any base compensation, bonus, severance pay or other benefits,
except as may be provided pursuant to any insurance coverage provided pursuant
to Section 4(c) hereof.
(c) Without Cause. "Without Cause" immediately upon written notice by the
------- -----
Employer to the Employee, in which case the Employer will continue to pay or
provide the Base Salary as in effect prior to such termination until the longer
of (i) one year after the date of such termination or (ii) the end of the
remainder of the then current term of employment described in Section 3 hereof
if such termination occurs prior to November 15, 1997. Upon termination of the
Employee's employment pursuant to this Section 6(c), the Employee shall be
entitled to receive the management incentive bonus he would have received, if
any, for the fiscal year of AmeriTruck in which such termination occurs, the
Base Salary as outlined in the immediately preceding sentence, and any benefits
as may be provided pursuant to any insurance coverage provided pursuant to
Section 4(c) hereof; otherwise, the Employee shall not be entitled to any base
compensation, bonus, severance pay or other benefit.
(S)7. INVENTIONS; ASSIGNMENT. All rights to discoveries, inventions,
improvements and innovations (including all data and records pertaining thereto)
related to
<PAGE>
-4-
the Employer's business, whether or not patentable, copyrightable or reduced to
writing, that the Employee may discover, invent or originate during the term of
his employment hereunder, and for a period of six months thereafter, either
alone or with others and whether or not during working hours or by the use of
the facilities of the Employer ("Inventions"), shall be the exclusive property
----------
of the Employer. The Employee shall promptly disclose all Inventions to the
Employer, shall execute at the request of the Employer any assignments or other
documents the Employer may deem necessary to protect or perfect its rights
therein, and shall assist the Employer, at the Employer's expense, in obtaining,
defending and enforcing the Employer's rights therein. The Employee hereby
appoints the Employer as his attorney-in fact to execute on his behalf any
assignments or other documents deemed necessary by the Employer to protect or
perfect its rights to any Inventions.
(S)8. CONFIDENTIAL INFORMATION. The Employee recognizes and acknowledges
that certain assets of the Employer and its affiliates, including, without
limitation, information regarding customers, pricing policies, methods of
operation, proprietary computer programs, sales, products, profits, costs,
markets, key personnel, formulae, product applications, technical processes, and
trade secrets (hereinafter called "Confidential Information") are valuable,
------------ -----------
special, and unique assets of the Employer and its affiliates. The Employee
shall not, during or after his term of employment, disclose any or any part of
the Confidential Information to any person, firm, corporation, association, or
any other entity for any reason or purpose whatsoever, directly or indirectly,
except as may be required pursuant to his employment hereunder, unless and until
such Confidential Information becomes publicly available other than as a
consequence of the breach by the Employee of his confidentiality obligations
hereunder. In the event of the termination of his employment, whether voluntary
or involuntary and whether by the Employer or the Employee, the Employee shall
deliver to the Employer all documents and data pertaining to the Confidential
Information and shall not take with him any documents or data of any kind or any
reproductions (in whole or in part) of any items relating to the Confidential
Information.
(S)9. NON-COMPETITION. During the term of the Employee's employment
hereunder and upon termination of the Employee's employment hereunder during the
Applicable Restricted Period (as defined below), the Employee will not (i)
engage, anywhere within the continental United States of America, directly or
indirectly, alone or as a shareholder, partner, officer, director, employee or
consultant of any other organization in the business of specialized distribution
services by motor carrier in interstate and/or intrastate commerce, including,
time sensitive delivery, special handling, specific temperature control,
"dedicated fleets" and logistics services (the "Designated Industry") in
---------- --------
competition with the Employer or any of its affiliates, (ii) divert to any
competitor of the Employer or any of its affiliates in the Designated Industry
any customer of any of the Employer or any of its affiliates, or (iii) solicit
or encourage any officer, employee or consultant of any of the Employer or any
of its affiliates to leave its employ for employment by or with any competitor
of any of the Employer or any of its affiliates in the Designated Industry. For
purposes hereof the term "Applicable Restricted Period" shall mean, (i) with
respect to any termination of the Employee's employment hereunder for Cause
under Section 6(b) or on
<PAGE>
-5-
account of the Employee's voluntary resignation, one year following such
termination; provided that if such termination occurs prior to November 15,
--------
1997, the Employer may, at its option, elect to extend such Applicable
Restricted Period after the end of the initial one-year period on a month-to-
month basis until November 15, 1998 so long as the Employer resumes making
payments of Base Salary to the Employee during such extension period at the
annual rate in effect on the date of such termination and (ii) with respect to
any termination of the Employee's employment hereunder by the Employer without
Cause under Section 6(c), so long as the Employer continues to make payments of
the Employee's Base Salary to Employee in accordance with the provisions of
Section 6(c) hereof. The Employee acknowledges that the provisions of this
Section 9 are essential to protect the business and goodwill of the Employer and
that such provisions are made as an inducement for AmeriTruck to enter into the
Purchase Agreement and to complete the transactions contemplated thereby. The
Employee will continue to be bound by the provisions of this Section 9 until
their expiration and shall not be entitled to any compensation from the Employer
with respect thereto. If at any time the provisions of this Section 9 shall be
determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 9 shall be
considered divisible and shall become and be immediately amended to only such
area, duration and scope of activity as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter; and
the Employee agrees that this Section 9 as so amended shall be valid and binding
as though any invalid or unenforceable provision had not been included herein.
(S)10. GENERAL.
(a) Notices. All notices and other communications hereunder shall be in
-------
writing or by written telecommunication, and shall be deemed to have been duly
given if delivered personally or if mailed by certified written
telecommunication, to the relevant address set forth below, or to such other
address as the recipient of such notice or communication shall have specified to
the other party hereto in accordance with this Section 10(a):
If to the Employer, to:
KTL, Inc.
c/o AmeriTruck Distribution Corp.
301 Commerce, Suite 1101
Fort Worth, Texas 76102
Attention: Chairman
with a copy to:
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110-1726
Attention: John R. Utzschneider, Esq.
<PAGE>
-6-
If to the Employee, to:
Ronald N. Damico
10530 Vonn Road
Largo, FL 34644
(b) Withholding. All payments by the Employer of Base Salary and other
-----------
compensation hereunder will be subject to all applicable federal, state and
local withholding tax requirements.
(c) Equitable Remedies. Each of the parties hereto acknowledges and
--------- --------
agrees that upon any breach by the Employee of his obligations under Sections 8
and 9 hereof, the Employer will have no adequate remedy at law, and accordingly
will be entitled to specific performance and other appropriate injunctive and
equitable relief.
(d) Severability. If any provision of this Agreement is or becomes
------------
invalid, illegal or unenforceable in any respect under any law, the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired.
(e) Waivers. No delay or omission by either party hereto in exercising
-------
any right, power or privilege hereunder shall impair such right, power or
privilege, nor shall any single or partial exercise of any such right, power or
privilege preclude any further exercise thereof or the exercise of any other
right, power or privilege.
(f) Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(g) Assigns. This Agreement shall be binding upon and inure to the
-------
benefit of the heirs and successors of each of the parties hereto.
(h) Entire Agreement. This Agreement contains the entire understanding of
------ ---------
the parties, supersedes all prior agreements and understandings relating to the
subject matter hereof and shall not be amended except by a written instrument
hereafter signed by each of the parties hereto.
(i) Governing Law. This Agreement and the performance hereof shall be
--------- ---
construed and governed in accordance with the laws of the State of Florida.
<PAGE>
-7-
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed as of the date and year
first above written.
KTL, INC.
By:____________________________________
Title:_________________________________
AMERITRUCK DISTRIBUTION CORP.
By:____________________________________
Title:_________________________________
_______________________________________
Ronald N. Damico
<PAGE>
EXHIBIT G
SECOND LEASE
OF
BUSINESS PREMISES
THE STATE OF FLORIDA
COUNTY PINELLAS
This Second Lease is made and executed in duplicate by and between RONALD
N. DAMICO and SANDRA L. DAMICO of 10530 Vonn Road, Largo, Florida 34644,
"Lessor," and KTL, INC., 1501 Lake Avenue, S.E., Largo, Florida 33541, "Lessee,"
and supersedes that Lease Agreement between the same parties under date of May
1, 1996, as of the Effective Date hereof (as defined hereinafter).
SECTION 1
Description of Premises:
- -----------------------
Lessor leases to Lessee, and Lessee hires from Lessor, the premises located
at 11300 43rd Street North, City of Clearwater, County of Pinellas, State of
Florida, and described more particularly as follows: Plat Book 084, Page 032-
034, 43rd Street, Industrial Park, Lot 7 (hereinafter the "Premises").
SECTION II
Term:
- ----
The term of this Lease is month to month, beginning September 1, 1996
(hereinafter the "Effective Date").
SECTION III
Rent:
- ----
The monthly rent of this Lease is the sum of $4,000.00, plus applicable
sales tax, all due and payable on the first day of each month.
<PAGE>
-2-
SECTION IV
Use of Premises:
- ---------------
The Premises are Leased to be used as office and warehouse space. Lessee
agrees to restrict their use to those purposes, and not to use or permit the use
of, the Premises for any other purpose without first obtaining the consent in
writing of Lessor, or of Lessor's authorized agent.
SECTION V
Prohibition Against Activities Increasing Fire Insurance Rates:
- --------------------------------------------------------------
Lessee agrees not to use the Premises in any manner, even for the purposes
for which the Premises are Leased, that will increase risks covered by insurance
on the building where the Premises are located, so as to increase the rate of
insurance on the Premises, or to cause cancellation of any insurance policy
covering the building. Lessee further agrees not to keep on the Premises, or
permit to be kept, used, or sold on the Premises, anything prohibited by the
policy of fire insurance covering the Premises. Lessee agrees to comply, at its
own expense, with all requirements of insurers necessary to keep in force the
fire and public liability insurance covering the Premises and building.
SECTION VI
Prohibition Against Waste, Nuisance or Unlawful Use:
- ---------------------------------------------------
Lessee shall not commit, or allow to be committed, any waste on the
Premises, create or allow any nuisance to exist on the Premises, or use or allow
the Premises to be used for any unlawful purpose.
SECTION VII
Effect of Delay in Delivering Possession:
- ----------------------------------------
<PAGE>
-3-
This Lease shall not be rendered void or voidable by Lessor's inability to
delivery possession to Lessee at the beginning of the Lease term, nor shall such
inability to deliver render Lessor liable to Lessee for loss or damage suffered
by it. If Lessor cannot deliver the Premises at that time, the rent for the
period between the beginning of the term and the time when Lessor can deliver
possession will be deducted from the total rent of the Lease. No extension of
the Lease shall result from a delay in delivering possession.
SECTION VIII
Payment of Utilities:
- --------------------
Lessee shall pay for all utilities furnished the Premises for the term of
this Lease, including electricity, gas, water and telephone service.
SECTION IX
Repairs and Maintenance:
- -----------------------
Lessee, at its expense, shall maintain and keep the Premises, including
without limitation, windows, doors, skylights, adjacent sidewalks, storefront,
and interior walls, in good repair. Lessor shall maintain in good condition the
building roof and exterior walls, except the storefront.
SECTION X
Delivery, Acceptance, and Surrender of Premises:
- -----------------------------------------------
(a) Lessor represents that the Premises are in fit condition for use as an
office and warehouse. Except as provided in part (b) hereof, Lessee agrees to
accept the Premises on the Effective Date as being in a good state of repair and
in sanitary condition. Lessee agrees to surrender the Premises to the Lessor at
the end of the Lease term, if the Lease is not
<PAGE>
-4-
renewed, in the same condition as of the Effective Date, allowing for reasonable
use and wear, and damage by acts of God, including fire and storms. Lessee
agrees to remove all business signs or symbols placed on the Premises by it
before redelivery of the Premises to the Lessor, and to restore the portion of
the Premises on which they were placed in the same condition as before their
placement.
(b) Lessor agrees to indemnify and hold Lessee (and its respective
officers, directors, employees and affiliates) harmless from and against any and
all claims, liabilities, losses, damages, costs and expenses, including
attorneys fees and disbursements (collectively, the "Losses") related to or
arising directly or indirectly out of:
(1) the violation by either Lessor or Lessee at any time prior to
Effective Date of any environmental laws;
(2) the release, emission or discharge (whether or not by the Lessor
or Lessee) or presence at any time on or prior to the Effective
Date of any hazardous substance, toxic pollutants or other
chemical by-products onto, from or into or on the Premises (with
any Losses to include any liability or alleged liability for
cleanup, removal, remediation or other response costs or for
death or injury to person or property);
(3) the release, emission or discharge by the Lessor or Lessee or any
of their agents at any time on or prior to the Effective Date of
any hazardous substance, toxic pollutants or other chemical by-
products onto, from or into or on the Premises (with any Losses
to include any
<PAGE>
-5-
liability or alleged liability for cleanup, removal, remediation
or other response costs or for death or injury to persons or
property) or
(4) any disposal or shipment by the Lessor or Lessee prior to the
Effective Date of any hazardous substance, toxic pollutants or
other chemical by-products (with any Losses or include any
liability or alleged liability for cleanup, removal, remediation
or other response costs or for death or injury to person or
property).
SECTION XI
Partial Destruction of Premises:
- -------------------------------
Partial destruction of the Premises shall not render this Lease void or
voidable, or terminate it except as provided here.
If the Premises are partially destroyed during the term of this Lease,
Lessor shall repair them, when such repairs can be made in conformity with
local, state, and federal laws and regulations, within a reasonable time after
the partial destruction. Rent for the Premises will be reduced proportionally to
the extent to which the repaired operations interfere with the normal conduct of
Lessee's business on the Premises. If the repairs cannot be so made within the
time limit, Lessor has the option to make them within a reasonable time and
continue this Lease in effect with proportional rent rebated to Lessee as
provided for here. If the repairs cannot be made in ninety (90) days , and if
Lessor does not elect to make them within a reasonable time, either party to
this Lease has the option to terminate the Lease. If the building in which the
Premises are
<PAGE>
-6-
located is more than one-third destroyed, Lessor may at its option terminate the
Lease whether the Premises are injured or not.
SECTION XII
Lessor's Right to Inspect, Repair, and Maintain Premises:
- --------------------------------------------------------
Lessor reserves the right to enter the Premises at reasonable times to inspect
them, to perform required maintenance and repair, or to make additions or
alterations to any part of the building in which the Premises Leased are
located, and Lessee agrees to permit Lessor to do so. Lessor may, in connection
with such alterations, additions, or repairs, erect scaffolding, fences, and
similar structures, post relevant notices, and place moveable equipment without
any obligation to reduce Lessee's rent for the Premises during such period, and
without incurring liability to Lessee for disturbance of quite enjoyment of the
Premises, or loss of occupation for the Premises.
SECTION XIII
Posting of Signs by Lessor:
- --------------------------
Lessor reserves the right to place "For Sale" signs on the Premises at any
time during the Lease, or "For Lease" or "For Rent" signs on the Premises at any
time.
SECTION XIV
Posting of Signs, Awnings, or Marquees by Lessee:
- ------------------------------------------------
Lessee agrees that it will not construct or place, or permit to be
constructed or placed, signs, awnings, marquees, or other structures projecting
from the exterior of the Premises without Lessor's written consent, which shall
not be unreasonably withheld. Lessee further agrees to remove signs, displays,
advertisements or decorations it has placed, or
<PAGE>
-7-
permitted to be placed, on the Premises, which, in Lessor's opinion, are
offensive or otherwise objectionable. If Lessee fails to remove such signs,
displays, advertisement, or decoration within ten (10) days after receiving
written notice from Lessor to remove them, Lessor reserves the right to enter
the Premises and remove them, at Lessee's expenses.
SECTION XV
Liability Insurance:
- -------------------
Lessee agrees to procure and maintain in force during the term of this
Lease and any extension of this Lease, at its expense, public liability
insurance in companies with a Best's rating of B or better, adequate to protect
against liability for damage claims through public use of or arising out of
accident occurring in or aground the Premises, in a minimum amount of $1,000,000
combined single limit. Lessee shall cause certificates of insurance to be issued
to Lessor, naming Lessor as an additional insured and imposing on the insurer a
written obligation from the insurers to notify Lessor in writing at least thirty
(30) days prior to cancellation or refusal to renew any policies. Lessee agrees
that, if the insurance policies are not kept in force during the entire term of
this Lease and any extension of this Lease, Lessor may procure the necessary
insurance, pay the premium, and that premium shall be repaid to Lessor as an
additional rent installment for the month following the date on which such
premiums are paid.
SECTION XVI
Assignment or SubLease:
- ----------------------
Lessee agrees not to assign or sublease the Premises or any part thereof,
or any right or privilege connected therewith, or to allow any
<PAGE>
-8-
other person, except Lessee's agents, employees and affiliates, to occupy the
Premises or any part of the Premises, without first obtaining Lessor's written
consent, which shall not be unreasonably withheld. One consent by Lessor shall
not be a consent to a subsequent assignment, sublease, or occupation by other
persons. Lessee's unauthorized assignment, sublease, or license to occupy shall
be void, and shall terminate the Lease at Lessor's option. Lessee's interest in
this Lease is not assignable by operation of law, nor is any assignment of its
interest in it, without Lessor's written consent, which shall not be
unreasonably withheld.
SECTION XVII
Effect of Lessee's Receivership or Assignment for Benefit of Creditors:
- ----------------------------------------------------------------------
Appointment of a receiver to take possession of Lessee's assets, except a
receiver appointed at Lessor's request as provided in this Lease or Lessee's
general assignment for benefit of creditors is a breach of this Lease.
SECTION XVIII
Lessor's Remedies on Lessee's Breach:
- ------------------------------------
In Lessee breaches this Lease, Lessor shall have the following remedies in
addition to its other rights and remedies in such event:
(a) Reentry. Lessor has the right to obtain possession of this Premises as
provided by law.
(b) Termination. After reentry, lessor may terminate the Lease on
giving three (3) days written notice of such termination to Lessee. Reentry
only, without notice of termination, will not terminate the Lease.
(c) Reletting Premises. After reentering, Lessor may relet the
Premises or any part thereof for any term, without terminating the Lease,
<PAGE>
-9-
at such rent and on such terms as they may choose. Lessor may make alterations
and repairs to the Premises.
(1) Liability of Lessee on Reletting. Lessee shall be liable to
Lessor in addition to its other liability for breach of the Lease for all
expenses of the reletting, and of the alterations and repairs made, which Lessor
may incur. In addition Lessee shall be liable to Lessor for the difference
between the rent received by Lessor under the reletting and the rent
installments that are due for the same period under this Lease.
(2) Lessor may recover from Lessee on terminating the Lease for
Lessee's breach all damages approximately resulting from the breach, including
the cost of recovering the Premises, which sum shall be immediately due Lessor
from Lessee.
SECTION XIX
Notices:
- -------
Notices given pursuant to the provisions of this Lease, or necessary
to carry out its provision, shall be in writing, and delivered personally to the
person to whom the notice is to be given, or mailed postage prepaid, addressed
to such person. Lessor's address for this purpose shall be 10530 Vonn Road,
Largo, Florida 34644, or such other address as they may in writing designate to
Lessee. Notice to Lessee may be addressed to Lessee at the Premises, with a
copy to:
J. Michael May
AmeriTruck Distribution Corp.
301 Commerce Street, Suite 1101
Fort Worth, Texas 76102
SECTION XX
Effect of Lessor's Waiver of Covenants:
- --------------------------------------
<PAGE>
-10-
Lessor's wavier of breach of one covenant or condition of this Lease is not
a waiver of breach of others, or of subsequent breach of the one waiver.
Lessor's acceptance of rent installments after breach is not a waiver of the
breach, except of breach of the covenant to pay the rent installment or
installments accepted.
SECTION XXI
Binding Effect on Successors and Assigns:
- ----------------------------------------
This Lease and the covenants and conditions of this Lease apply to and are
binding on the heirs, successors, executors, administrators, and assigns of the
parties to this Lease.
SECTION XXII
Time of the Essence:
- -------------------
Time is of the essence in this Lease.
SECTION XXIII
Effect of Eminent Domain Proceedings:
- ------------------------------------
Eminent domain proceedings resulting in the condemnation of a part of the
Premises that leave the rest usable by Lessee for purposes of the business for
which the Premises are Leased will not terminate this Lease, unless Lessor at
their option terminates it by giving written notice to termination to the
Lessee. The effect of such condemnations should such option not be exercised,
will be to terminate the Lease as to the portion of the Premises condemned, and
leave it in effect as to the remainder of the Premises. Lessee's rental for the
remainder of the Lease term shall in such case be reduced by the amount that the
usefulness of the Premises to it for such business purpose is reduced. All
compensation awarded in the eminent domain proceedings as a result of such
<PAGE>
-11-
condemnation shall be Lessor's. Lessee assigns and transfers to Lessor any
claim it may have to compensation for damages as a result of such condemnation.
Executed on August 23,1996.
LESSOR: RONALD N. DAMICO AND
SANDRA L. DAMICO
Witnesses:
- --------------------------- ---------------------------
Ronald N. Damico
- ---------------------------
As to Ronald N. Damico
- --------------------------- --------------------------
Sandra L. Damico
- ---------------------------
As to Sandra L. Damico
LESSEE: KTL, INC., A FLORIDA CORPORATION
By:
-----------------------
M. Lawrence, as
Chairman
ATTEST:
By:
-------------------------
Print: J. Michael May, as
Secretary
This Instrument Prepared By:
R. Jeffrey Stull, Esquire
Stull & Barber, P.A.
602 South Boulevard
Tampa, Florida 33606
(813) 251-3914
<PAGE>
EXHIBIT H
August 23, 1996
Ronald N. Damico
Grand Hope Investments, Inc.
10530 of Vonn Road
Largo, Florida 34644
Re: KTL, Inc.
---------
Ladies and Gentlemen:
We have acted as special counsel to AmeriTruck Distribution Corp., a
Delaware corporation (the "Buyer"), in connection with the transactions
-----
contemplated by the Stock Purchase Agreement, dated as of August 23, 1996 (the
"Purchase Agreement"), by and among the Buyer, Ronald N. Damico (the "Seller"),
- ------------------- ------
and Grand Hope Investments, Inc., a Florida corporation ("Grand Hope"), pursuant
----------
to which the Buyer has agreed to purchase all of the outstanding capital stock
of KTL, Inc., a Florida corporation ("KTL"), from the Seller, and cause KTL to
---
lease a certain parcel of real estate from Grand Hope, subject to an obligation
to purchase the relevant real estate upon expiration of such lease. This
opinion is being delivered to you pursuant to Section 9.4 of the Purchase
Agreement. All capitalized terms that are used herein without definition have
the meanings set forth for such terms in the Purchase Agreement.
In connection with the rendering this opinion, we have reviewed originals
or copies of each of the Purchase Agreement, the Employment and Non-Competition
Agreements and the Largo Lease (referred to hereinafter collectively as the
"Acquisition Agreements"), copies of the charter documents and by-laws of the
- -----------------------
Buyer, resolutions of the Board of Directors of the Buyer authorizing and/or
ratifying the transactions contemplated by the Acquisition Agreements and such
other documents as we have deemed necessary or appropriate for purposes of this
opinion.
As to all matters of fact (including factual conclusions and
characterizations and descriptions of purpose, intention or other states of
mind), we have relied entirely upon representations made to us by officers of
the Buyer and have assumed, without independent inquiry, the accuracy of such
representations.
As to any opinion below relating to the organization, existence,
qualification or standing of the Buyer in any jurisdiction, our opinion relies
entirely upon and is limited by those certificates of public officials attached
hereto as Exhibit 1.
------- -
<PAGE>
Ronald N. Damico
Grand Hope Investments, Inc.
August 23, 1996
Page 2
We have assumed the genuineness of all signatures, the conformity to the
originals of all documents reviewed by us as copies, the authenticity and
completeness of all original documents reviewed by us in original or copy form
and the legal competence of each individual executing any document.
When an opinion set forth below is given to the best of our knowledge, or
to our knowledge, or with reference to matters of which we are aware or which
are known to us, or with another similar qualification, the relevant knowledge
or awareness is limited to the actual knowledge or awareness the lawyers in this
firm who have participated in the transactions contemplated by the Purchase
Agreement have gained through participation in the specific transactions to
which this opinion relates and without any special or additional investigation
undertaken for the purposes of this opinion.
Each opinion set forth below relating to the enforceability of any
agreement or instrument against the Buyer is subject to the following general
qualifications:
(i) as to any agreement to which the Buyer is a party, we assume that
such agreement is the binding obligation of each other party
thereto;
(ii) as to any agreement or instrument to which the Buyer is a party, we
assume that the Buyer has received the agreed-to consideration
therefor;
(iii) the enforceability of any obligation of the Buyer may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, marshaling or other laws and rules of law affecting the
enforcement generally of creditors' rights and remedies (including
such as may deny giving effect to waivers of debtors' or guarantors'
rights);
(iv) no opinion is given herein as to the availability of any special or
equitable relief of any kind;
(v) the enforcement of any of your rights may in all cases be subject to
an implied duty of good faith and to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding at law or in equity).
We express no opinion as to the applicability of the antitrust laws of the
United States of America or of any state, including but not limited to the H-S-R
Act, or of any federal or state securities laws, to any of the transactions
contemplated by the Purchase Agreement.
<PAGE>
Ronald N. Damico
Grand Hope Investments, Inc.
August 23, 1996
Page 3
Subject to the limitations set forth above and below, we have made such
examination of law as we have deemed necessary for purposes of this opinion. In
addition to the limitation in the preceding paragraph, this opinion is limited
solely to the laws of the Commonwealth of Massachusetts as applied by courts
located therein, the General Corporation Law of the State of Delaware as applied
by courts located in Delaware (the "DGCL"), and the federal laws of the United
----
States of America, to the extent that the same may apply to or govern such
transactions. In this regard, we note that certain of the Acquisition
Agreements contain provisions to the effect that the laws of a jurisdiction
other than those recited in the preceding sentence are intended to be governing.
For purposes of our opinion herein we have assumed, with your permission and
without any independent investigation, that the laws of any such jurisdiction
that may govern the Acquisition Agreements are identical in all relevant
respects to the laws of the Commonwealth of Massachusetts.
We understand that all of the foregoing assumptions and limitations are
acceptable to you.
Based upon the foregoing, we are of the opinion that:
1. The Buyer is a corporation duly organized, validly existing and in
corporate good standing under the laws of the State of Delaware.
2. The Buyer has the corporate power to enter into the Acquisition
Agreements to which it is a party and to consummate the transactions
contemplated thereby. The execution and delivery by the Buyer of the
Acquisition Agreements to which it is a party and the consummation of the
transactions contemplated thereby have been duly authorized by all required
corporate action on the part of the Buyer.
3. The authorized capital stock of the Buyer consists of 4,875,000 shares
of Class A Common Stock, $.01 par value per share ("Class A Stock"), 4,875,000
-------------
shares of Class B Non-Voting Common Stock, $.01 par value per share ("Class B
-------
Stock") and 1,775,000 shares of Class C Voting Common Stock, $.01 par value per
- -----
share ("Class C Stock"). Upon consummation of the transactions contemplated by
-------------
the Acquisition Agreements, 2,108,189 shares of Class A Stock, no shares of
Class B Stock and 1,394,814 shares of Class C Stock will be outstanding of
record, all of which will be duly authorized and validly issued, fully paid and
non-assessable.
<PAGE>
Ronald N. Damico
Grand Hope Investments, Inc.
August 23, 1996
Page 4
4. The Purchase Agreement has been duly executed and delivered by the
Buyer and constitutes the legal, valid and binding obligation of the Buyer,
enforceable against the Buyer in accordance with its terms.
5. Neither the execution nor the delivery by the Buyer of any of the
Acquisition Agreements to which it is a party nor the consummation by the Buyer
of the transactions contemplated thereby will constitute a violation of, or be
in conflict with, constitute or create a default under, or result in the
creation or imposition of any liens upon any property of the Buyer pursuant to:
(i) the Certificate of Incorporation or By-Laws of the Buyer, each as amended to
date; (ii) to our knowledge, any agreement or commitment to which the Buyer is a
party or by which the Buyer or any of its properties is bound or to which the
Buyer or any of its properties is subject; or (iii) any Delaware, Massachusetts
or federal statute or regulation or rule relating to the Buyer (except for
securities or "Blue Sky" laws as to which we express no opinion).
6. Except for (i) the filings and approvals referred to in Schedule 6.4
-------- ---
to the Purchase Agreement, or (ii) any filing and recording of documents
normally required in connection with the conveyance of title to personal and
real property or Intellectual Property, no approval or consent or other action
by, and no filing or registration with, any agency or governmental authority of
the Commonwealth of Massachusetts, State of Delaware (under the DGCL) or of the
federal government of the United States of America is required under existing
law or regulations as a condition to the valid execution, delivery and
performance by the Buyer of the Acquisition Agreements to which it is a party or
the effectiveness of the transactions contemplated thereby.
This opinion has been delivered solely for your use in connection with the
transactions contemplated by the Purchase Agreement and may not be referred to
or used for any other purpose or relied upon by any other person, except with
our prior consent. The opinions expressed herein are given as of the date
hereof and we undertake no obligation hereby and disclaim any obligation to
advise you of any change after the date hereof pertaining to any matter referred
to herein.
Yours very truly,
BINGHAM, DANA & GOULD LLP
