<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 33-99716
AMERITRUCK DISTRIBUTION CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2619368
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
City Center Tower II, Suite 1101, 301 Commerce Street, Fort Worth, Texas 76102
(Address of principal executive offices) (Zip Code)
(817) 332-6020
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
<PAGE>
AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES
TABLE OF CONTENTS
Part I FINANCIAL INFORMATION Page
----
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 8
Part II OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 15
i
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1997* 1996*
--------- ---------
<S> <C> <C>
Operating revenue $55,668 $44,649
------- -------
Operating expenses:
Salaries, wages and fringe benefits 19,216 14,441
Purchased transportation 13,009 10,184
Fuel and fuel taxes 7,485 5,614
Operating supplies and expenses 3,611 3,002
Depreciation and amortization of 3,718 2,988
capital leases
Claims and insurance 2,318 1,698
Operating taxes and licenses 1,283 1,001
General supplies and expenses 2,612 1,502
Building and office equipment rents 462 314
Amortization of intangibles 293 233
(Gain) loss on disposal of property 46 (187)
and equipment ------- -------
Total operating expenses 54,053 40,790
------- -------
Operating income 1,615 3,859
Interest expense 4,494 3,688
Other income (expense), net (41) 41
------- -------
Income (loss) before income taxes and (2,920) 212
extraordinary item
Income taxes expense (benefit) (1,168) 93
------- -------
Income (loss) before extraordinary item (1,752) 119
Extraordinary item, loss on early
retirement of debt,
net of taxes of $154 - (230)
------- -------
Net loss $(1,752) $ (111)
======= =======
</TABLE>
* Comparisons between periods are affected by acquisitions - see Note 2.
See accompanying notes to consolidated financial statements.
1
<PAGE>
AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,110 $ 734
Accounts and notes receivable, net 27,854 29,001
Prepaid expenses 8,140 7,735
Repair parts and supplies 1,286 1,092
Deferred income taxes 1,467 1,467
Other current assets 1,313 1,388
-------- --------
Total current assets 42,170 41,417
Property and equipment, net 100,201 103,801
Goodwill, net 39,140 39,399
Notes receivable 843 975
Other assets 7,566 7,056
-------- --------
Total assets $189,920 $192,648
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Current portion of long-term debt $ 10,704 $ 11,988
Accounts payable and accrued expenses 17,030 13,557
Claims and insurance accruals 1,594 1,684
Other current liabilities 542 593
-------- --------
Total current liabilities 29,870 27,822
Long-term debt 155,497 157,338
Deferred income taxes 7,403 8,571
Other liabilities 2,726 2,741
-------- --------
Total liabilities 195,496 196,472
-------- --------
Stockholders' equity (deficiency):
Common stock; $.01 par value; 3,503
shares issued and outstanding 35 35
Additional paid-in capital 898 898
Loans to stockholders (1,880) (1,880)
Accumulated deficit (4,629) (2,877)
-------- --------
Total stockholders' equity
(deficiency) (5,576) (3,824)
Total liabilities and -------- --------
stockholders' equity
(deficiency) $189,920 $192,648
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1997* 1996*
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(1,752) $ (111)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization of
capital leases 3,718 2,988
Amortization of intangibles 293 233
(Gain) loss on disposal of property
and equipment 46 (187)
Provision (benefit) for deferred
income taxes (1,168) 93
Extraordinary item, loss on early
retirement of debt, net of taxes - 230
Other, net (293) (2)
Changes in current assets and
liabilities:
Accounts and notes receivable, net (1,296) (5,914)
Prepaid expenses (796) (1,637)
Repair parts and supplies (194) 12
Other current assets 88 58
Accounts payable and accrued
expenses 3,444 1,762
Claims and insurance accruals (90) 461
Other current liabilities (50) 70
------- --------
Net cash provided by (used in)
operating activities 1,950 (1,944)
------- --------
INVESTING ACTIVITIES:
Purchase of Freymiller assets, net of
liabilities assumed - (18,128)
Purchase of property and equipment (1,388) (9,587)
Proceeds from sale of property and
equipment 3,914 1,200
Other, net 189 (261)
------- --------
Net cash provided by (used in)
investing activities 2,715 (26,776)
------- --------
FINANCING ACTIVITIES:
Revolving line of credit 1,022 -
Proceeds from issuance of long-term
debt - 29,448
Repayment of long-term debt (4,183) (13,465)
Other, net (128) (663)
------- --------
Net cash provided by (used in)
financing activities (3,289) 15,320
------- --------
Net increase (decrease) in cash and
cash equivalents 1,376 (13,400)
Cash and cash equivalents, beginning of
period 734 15,286
------- --------
Cash and cash equivalents, end of period $ 2,110 $ 1,886
======= ========
Supplemental cash flow information:
Cash paid during the period for:
Interest $ 1,598 $ 1,015
Income taxes 39 96
Property and equipment financed
through capital lease obligations and
other debt - 110
</TABLE>
* Comparisons between periods are affected by acquisitions - see Note 2.
See accompanying notes to consolidated financial statements.
3
<PAGE>
AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. ACCOUNTING POLICIES AND INTERIM RESULTS
The 1996 Annual Report on Form 10-K for AmeriTruck Distribution Corp.
("AmeriTruck" or the "Company") and its wholly-owned subsidiaries includes a
summary of significant accounting policies and should be read in conjunction
with this Form 10-Q. The statements for the periods 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, all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position as of March
31, 1997 and December 31, 1996 and the results of operations and cash flows
for the three-month periods ended March 31, 1997 and 1996 have been included.
The results of operations for any interim period are not necessarily
indicative of the results of operations to be expected for the entire year.
Certain prior year data has been reclassified to conform to current year
presentation.
Separate financial statements of the Company's subsidiaries are not
included because (a) all of the Company's direct and indirect subsidiaries
have guaranteed the Company's obligations under the Indenture, dated as of
November 15, 1995 (the "Indenture"), among the Company, such subsidiaries (in
such capacity, the "Guarantors"), and The Bank of New York, as Trustee, (b)
the Guarantors have fully and unconditionally guaranteed the 12 1/4% Senior
Subordinated Notes due 2005 ("Subordinated Notes") issued under the Indenture
on a joint and several basis, (c) the Company is a holding company with no
independent assets or operations other than its investments in the Guarantors
and (d) the separate financial statements and other disclosures concerning the
Guarantors are not presented because management has determined that they would
not be material.
2. ACQUISITIONS
AmeriTruck was formed in August 1995 to effect the combination of six
regional trucking lines in November 1995: W&L Services Corp. ("W&L"),
Thompson Bros., Inc. ("TBI"), J.C. Bangerter & Sons, Inc., ("Bangerter"), CMS
Transportation Services, Inc. and certain related companies, Scales Transport
Corporation and a related company ("Scales") and C.B.S. Express, Inc. ("CBS").
Prior to these acquisitions, W&L and TBI had certain common stockholders who
controlled approximately 87 percent of the common equity of W&L and TBI on a
combined basis. In addition, these stockholders controlled approximately 67
percent of the outstanding common stock of AmeriTruck after the consummation
of these acquisitions. Therefore, these common stockholders of W&L and TBI
have been treated as the acquirer for purposes of accounting for these
acquisitions.
During the third quarter of 1996, AmeriTruck purchased all of the
outstanding stock of KTL, Inc. ("KTL") of Largo, Florida, from Ronald N.
Damico for a purchase price of $8.1 million in cash and 225,000 shares of
Class A common stock of AmeriTruck valued at $900,000. As part of the
transaction, Mr. Damico and KTL entered into an employment agreement under
which Mr. Damico became employed as KTL's President and Chief Executive
Officer. 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. 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 for an 18-month
term, at which time KTL has agreed to purchase the property for $2.4 million
less the total amount of environmental-related costs incurred subsequent to
August 16, 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. At the time of
purchase, KTL operated approximately 140 tractors and 300 trailers and
employed approximately 300 persons, of whom 240 were drivers and many of whom
operated as two-driver teams.
The KTL acquisition was accounted for using the purchase method of
accounting. Accordingly, the purchase price was allocated to the assets acquired
and liabilities assumed based on their estimated fair values at the date of
acquisition. The total purchase price including cash, common stock,
miscellaneous acquisition costs and liabilities assumed was $21.9 million. The
excess of the purchase price over the fair values of the net assets acquired has
been recorded as goodwill.
4
<PAGE>
In February 1996, the Company, through CMS Transportation Services, Inc.,
purchased certain assets of Freymiller Trucking Inc. ("Freymiller") in order
to supplement its existing temperature-controlled trucking business.
Freymiller had been the subject of a Chapter 11 bankruptcy proceeding in
Oklahoma. CMS purchased certain specific automobiles, computer hardware and
software, furniture and fixtures, rights to the trade name "Freymiller",
existing spare parts, tires and fuel, rights under certain leases, certain
leasehold improvements and shop equipment and installment sales contracts
relating to tractors and trailers sold by Freymiller out of the ordinary
course of business (with all of the foregoing referred to as the "Freymiller
Assets"). The Company also negotiated with Freymiller's lenders and lessors
to purchase approximately 185 tractors and 309 trailers, previously operated
by Freymiller, for approximately $14 million. An additional 80 trailers were
leased for a seven-year period. In exchange for the Freymiller Assets, the
Company paid approximately $2.7 million in cash at closing and assumed
approximately $2 million in existing equipment financing. In addition, the
Company assumed a lease for Freymiller's maintenance facility in Oklahoma City
and certain routine executory business contracts. Except as provided above,
the Company did not assume any obligations or liabilities of Freymiller.
In connection with these transactions, the Company purchased real property
in Oklahoma City, Oklahoma from Freymiller's Chairman of the Board, President
and Chief Executive Officer for approximately $1.5 million in cash.
In April 1996, CMS Transportation Services, Inc. changed its corporate name
to "AmeriTruck Refrigerated Transport, Inc." ("ART"), and the distribution
functions previously conducted under the corporate name "CMS Transportation
Services, Inc." were continued as a division of ART. In addition, in June
1996, the business operations of CBS, a general freight carrier (which then
operated under the name "CBS Express, Inc."), were transferred to Scales. In
December 1996, the distribution functions of the CMS Transportation division
of ART were transferred to CBS and its name was changed to "CMS Transportation
Services, Inc." ("CMS"). The CMS Transportation distribution business
currently operated by CMS is sometimes referred to below as the "CMS
distribution business" and the business operations previously operated under
the name CBS Express, Inc. and transferred to Scales are sometimes referred to
as the "CBS Express business."
The Company's principal subsidiaries currently are W&L, TBI, Bangerter,
CMS, Scales, ART and KTL (the "Operating Companies"). All significant
intercompany accounts and transactions have been eliminated.
Pending Acquisitions
Subsequent to March 31, 1997, the Company has signed a definitive agreement
to acquire the capital stock of Tran-Star, Inc. ("Tran-Star") which is owned by
Allways Services, Inc. Tran-Star is a carrier of refrigerated and non-
refrigerated products. Tran-Star had 1996 revenues of $68.5 million. The
purchase price for this acquisition is $3.8 million, payable in cash. The
Company also would assume or refinance indebtedness estimated at approximately
$30 million. In addition, under the terms of the agreement the Company would
lease a terminal at Etters, Pennsylvania from a Tran-Star affiliate for one
year, and purchase the property at the end of the lease term for $500,000, less
any environmental remediation costs incurred by the Company or Tran-Star in
connection with the property. If this acquisition is completed, the Company
intends to coordinate Tran-Star's activities with those of the other Operating
Companies. Tran-Star, headquartered in Waupaca, Wisconsin, operates primarily in
between the upper midwestern U.S. and the northeast and southeast, with
terminals at Etters and Scranton, Pennsylvania.
The Company has also signed a definitive agreement with subsidiaries of
ConAgra, Inc. ("ConAgra") to acquire the capital stock of Monfort Transportation
Company ("Monfort Transportation") and Lynn Transportation Co., Inc. ("Lynn
Transportation"). Monfort Transportation and Lynn Transportation operate
primarily as in-house carriers for the red meat division of Monfort, Inc., a
ConAgra subsidiary, and the poultry and turkey divisions of ConAgra Poultry
Company, a ConAgra subsidiary. Under the terms of this Agreement the purchase
price is $15 million, payable in cash. The Company would also sublease certain
operating equipment from ConAgra or its subsidiaries. Under the terms of the
proposed acquisition, AmeriTruck would enter into a Transportation Services
Agreement with subsidiaries of ConAgra. Under the terms of this agreement,
these ConAgra subsidiaries would agree to tender freight from Monfort, Inc.'s
red meat division, ConAgra Poultry Company's poultry and turkey divisions and
Swift-Eckerich, Inc.'s processed meats division in designated lanes and minimum
annual volumes. The agreement would have a four year term, with pricing fixed
for the first two years and to be adjusted for the third and fourth years.
The Company intends to complete both the Tran-Star acquisition and the
acquisitions from ConAgra by the end of May. However, these acquisitions are
subject to a number of conditions and no assurances can be made that the Company
will complete these acquisitions.
3. LONG-TERM DEBT
NationsBank Credit Facility
In February 1996, the Company and its subsidiaries entered into a Loan
Agreement and related documents (collectively, the "NationsBank Credit
Facility") with NationsBank of Texas, N.A. ("NationsBank") pursuant to which
NationsBank has provided a $30 million credit facility to the Company.
Borrowings under the NationsBank Credit Facility can be used for acquisitions,
operating capital, capital expenditures, letters of credit and general
corporate purposes. Pursuant to the NationsBank Credit Facility, as amended,
NationsBank has provided a $30 million revolving credit facility, with a $7
million sublimit for letters of credit, maturing on February 1, 1998, at which
time the revolving credit facility will convert into a term loan maturing on
February 1, 2003. This facility is also subject to a borrowing base consisting
of eligible receivables and eligible revenue equipment. Currently, the
Company's borrowing base exceeds $30 million. Borrowings under the NationsBank
Credit Facility bear interest at a per annum rate equal to either
NationsBank's base rate or the rate of interest offered by NationsBank in the
interbank eurodollar market plus an additional margin ranging from 1.5 percent
to 2.0 percent based on the Senior Funded Debt Ratio of the Company. The
Company also pays a letter of credit issuance fee and a quarterly unused
facility fee. Borrowings under the NationsBank Credit Facility were $24.5
million at March 31, 1997 and were primarily used for the purchase of the
Freymiller Assets and the KTL acquisition. Available borrowings were $4.4
million at March 31, 1997 as there were $1.1 million in letters of credit
outstanding.
The Company's obligations under the NationsBank Credit Facility are
collateralized by substantially all personal property of the Company and its
subsidiaries and are guaranteed in full by each of the Operating Companies.
For purposes of the Indenture, such borrowings under the NationsBank Credit
Facility constitute Senior Indebtedness of the Company and Guarantor Senior
Indebtedness of the Operating Companies.
5
<PAGE>
The NationsBank Credit Facility contains customary representations and
warranties and events of default and requires compliance with a number of
affirmative and negative covenants, including a limitation on the incurrence
of indebtedness and a requirement that the Company maintain a specified Senior
Funded Debt Ratio and Fixed Charge Coverage Ratio.
In May 1997, the Company and its subsidiaries entered into a Loan and
Security Agreement and related documents (collectively, the "FINOVA Credit
Facility") with FINOVA Capital Corporation ("FINOVA") pursuant to which FINOVA
has agreed to provide a $60 million credit facility to the Company. The
initial borrowings under the FINOVA Credit Facility were used to refinance the
Company's prior credit facility with NationsBank of Texas, N.A. Additional
borrowings under the FINOVA Credit Facility can be used for acquisitions,
capital expenditures, letters of credit, working capital and general corporate
purposes. Pursuant to the FINOVA Credit Facility, FINOVA has agreed to
provide a $60 million revolving credit facility, with a $10 million sublimit
for the issuance of letters of credit, maturing on May 5, 2000 (subject to
additional one year renewal periods at the discretion of FINOVA). The FINOVA
Credit Facility is also subject to a borrowing base consisting of eligible
receivables and eligible revenue equipment. Currently, the Company's
borrowing base supports borrowings of approximately $42 million. Revolving
credit loans under the FINOVA Credit Facility bear interest at a per annum
rate equal to either the prime rate plus a margin equal to 0.75 percent or the
rate of interest offered in the London interbank market plus a margin equal to
2.75 percent. The Company also pays a monthly unused facility fee and a
monthly collateral monitoring fee in connection with the FINOVA Credit
Facility. Revolving credit loans under the FINOVA Credit Facility were $26.7
million at May 6, 1997 and were primarily used for refinancing borrowings
under the Company's prior facility with NationsBank of Texas, N.A. Available
borrowings were $13.7 million at May 6, 1997 as there were $910,000 in letters
of credit outstanding.
The Company's obligations under the FINOVA Credit Facility are
collateralized by substantially all of the unencumbered assets of the Company
and its subsidiaries and are guaranteed in full by each of the Operating
Companies. For purposes of the Indenture, the borrowings under the FINOVA
Credit Facility constitute Senior Indebtedness of the Company and Guarantor
Senior Indebtedness of the Operating Companies.
The FINOVA Credit Facility contains customary representations and warranties
and events of default and requires compliance with a number of affirmative,
negative and financial covenants, including a limitation on the incurrence of
indebtedness and a requirement that the Company maintain a specified Current
Ratio, Net Worth, Debt Service Coverage Ratio and Operating Ratio.
Volvo Credit Facilities
In February 1996, the Company and its subsidiaries entered into a Loan and
Security Agreement, a Financing Integration Agreement and related documents
(collectively, the "Volvo Credit Facilities") with Volvo Truck Finance North
America, Inc. ("Volvo") pursuant to which Volvo has committed, subject to the
terms and conditions of the Volvo Credit Facilities, to provide (i) a $10
million line of credit facility (the "Volvo Line of Credit") to the Company
and the Operating Companies, and (ii) up to $28 million in purchase money or
lease financing (the "Equipment Financing Facility") in connection with the
Operating Companies' acquisition of new tractors and trailers manufactured by
Volvo GM Heavy Truck Corporation. Borrowings under the Volvo Line of Credit
are secured by certain specified tractors and trailers of the Company and the
Operating Companies (which must have a value equal to at least 1.75 times the
outstanding amount of borrowings under the Volvo Line of Credit) and are
guaranteed in full by each of the Operating Companies. As of March 31, 1997,
the Operating Companies have pledged collateral which provides for a $9.5
million line of credit. Borrowings under the Volvo Line of Credit bear
interest at the prime rate. The Volvo Line of Credit contains customary
representations and warranties and events of default and requires compliance
with a number of affirmative and negative covenants, including a profitability
requirement and a coverage ratio.
6
<PAGE>
The Equipment Financing Facility is being provided by Volvo in connection
with the Operating Companies' agreement to purchase 400 new trucks
manufactured by Volvo GM Heavy Truck Corporation between March 1, 1996 and
June 30, 1997. The borrowings under the Equipment Financing Facility are
collateralized by the specific trucks being financed and are guaranteed in
full by each of the Operating Companies. Borrowings under this facility bear
interest at the prime rate.
At March 31, 1997, borrowings outstanding under the Volvo Line of Credit
were $9.4 million with available borrowings of $100,000. The outstanding debt
balance under the Equipment Financing Facility was $3.7 million at March 31,
1997; however, available financing under this facility is less than $4 million
as financing was also obtained through operating leases.
The Equipment Financing Facility contains customary representations and
warranties, covenants and events of default. For purposes of the Indenture,
the borrowings under the Volvo Credit Facilities constitute Senior
Indebtedness of the Company and Guarantor Senior Indebtedness of the Operating
Companies.
4. CONTINGENCIES
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 ("EPA") and other
agencies. The Company cannot predict with any certainty that it will not in
the future incur liability with respect to environmental compliance or
liability associated with the contamination of sites owned or operated by the
Company and its subsidiaries, sites formerly owned or operated by the Company
and its subsidiaries (including contamination caused by prior owners and
operators of such sites), or off-site disposal of hazardous material or waste
that could have a material adverse effect on the Company's consolidated
financial condition, operations or liquidity.
The Company and the Operating Companies are a party to litigation
incidental to its business, primarily involving claims for personal injury or
property damages incurred in the transportation of freight. The Company is not
aware of any claims or threatened litigation that might have a material
adverse effect on the Company's consolidated financial position, operations
or liquidity.
5. OTHER INCOME (EXPENSE), NET
Other income (expense) consists of the following for the three months ended
March 31 (in thousands):
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Interest income $ 43 $ 151
Amortization of financing fees (124) (115)
Miscellaneous, net 40 5
----- -----
$ (41) $ 41
===== =====
</TABLE>
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following analysis should be read in conjunction with the consolidated
financial statements included in Item 1 - "Financial Statements." Results for
the three months ended March 31, 1996 include W&L, TBI, Bangerter, the CMS
distribution business and Scales (including the CBS Express business) for the
entire period and the results of ART, as it relates to the Freymiller Assets
since February 5, 1996. Results for the three months ended March 31, 1997 for
the Company include the results of W&L, TBI, Bangerter, the CMS distribution
business, Scales (including the CBS Express business), ART and KTL.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1996
Net Income
For the quarter ended March 31,1997, the Company had a net loss of $1.8
million compared with a net loss of $111,000 for the same period in 1996.
Results for the first quarter of 1997 were negatively impacted primarily by
severe weather, escalating fuel costs, ongoing losses stemming from the
Freymiller acquisition (see "Opportunistic Acquisitions") and an increase in
interest costs. The net loss in 1996 includes an extraordinary item, loss on
early retirement of debt of $230,000, net of taxes of $154,000. These early
retirements related to the use of proceeds from the Company's Subordinated Notes
offering in 1995.
Revenues
First quarter revenues for 1997 improved $11.0 million, or 25 percent,
compared with the first quarter of 1996. Revenues from KTL represent $7.4
million, or 67 percent of this increase. The remaining increase is primarily
attributable to an additional month of revenues generated from the purchase of
the Freymiller Assets in February 1996.
Expenses
The following table sets forth operating expenses as a percentage of revenues
and the related variance from 1997 to 1996.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 VARIANCE
------------------ INCREASE
1997 1996 (DECREASE)
---- ---- ----------
<S> <C> <C> <C>
Salaries, wages and fringe benefits 34.5% 32.4% 2.1%
Purchased transportation 23.4 22.8 0.6
Fuel and fuel taxes 13.4 12.6 0.8
Operating supplies and expenses 6.5 6.7 (0.2)
Depreciation and amortization of
capital leases 6.7 6.7 -
Claims and insurance 4.2 3.8 0.4
Operating taxes and licenses 2.3 2.2 0.1
General supplies and expenses 4.7 3.4 1.3
Building and office equipment rents 0.8 0.7 0.1
Amortization of intangibles 0.5 0.5 -
(Gain) loss on disposal of property
and equipment 0.1 (0.4) 0.5
---- ---- ----
Operating Ratio 97.1% 91.4% 5.7%
==== ==== ====
</TABLE>
Salaries, wages and fringe benefits for the first quarter of 1997 increased
2.1 percentage points as a percentage of revenue. This increase is primarily
due to an increase in driver wages which replaced driver per diems at three of
the operating companies and due to an increase in salaries at corporate as a
result of continued development of corporate staff after the first quarter of
1996.
8
<PAGE>
Purchased transportation costs were up 0.6 percentage points as a percent of
revenue when compared with the first quarter of 1996. This increase is
primarily due to a higher percentage of equipment held under operating leases
and an increase in owner operator miles.
Fuel and fuel taxes increased as a percent of revenue by 0.8 percentage
points due to unfavorable fuel price variances and due to lower miles per gallon
as a result of severe weather. According to a Department of Energy survey,
reported by the American Trucking Association, the average price of diesel fuel
for the first quarter of 1997 was approximately 10 cents above the average price
for the first quarter of 1996. The Company has seen its fuel prices increase at
a rate slightly below this national average due to the Company's ability to buy
fuel at a discount during the first quarter of 1997.
Operating supplies and expenses for the Company decreased as a percentage of
revenue when compared with the first quarter of 1996. This decrease was due to
lower maintenance costs for the Company, which resulted from newer equipment
being put into service.
Claims and insurance expenses increase 0.4 percentage points as a percent of
revenue. This increase is primarily due to unfavorable claims experience caused
by severe winter weather.
General supplies and expenses increased 1.3 percentage points for the first
quarter of 1997 as a percentage of revenue when compared with the same period in
1996. This increase is due to increased professional and consulting fees
resulting from increased driver recruitment and advertising and added costs for
system and mobile communications, which should be partially offset in the future
by improved operating efficiencies.
Interest expense increased $806,000 for the quarter ended March 31, 1997 over
the same period in 1996 due to an increase in the levels of debt outstanding.
Debt levels increased primarily due to the financing of new tractors and
trailers, the debt acquired in connection with the KTL acquisition and
borrowings under the Volvo line of credit.
CONTINGENCIES
Environmental Matters
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 ("EPA") and other
agencies. The Company cannot predict with any certainty that it will not in the
future incur liability with respect to environmental compliance or liability
associated with the contamination of sites owned or operated by the Company and
its subsidiaries, sites formerly owned or operated by the Company and its
subsidiaries (including contamination caused by prior owners and operators of
such sites), or off-site disposal of hazardous material or waste that could have
a material adverse effect on the Company's consolidated financial condition,
operations or liquidity.
The Company and the Operating Companies are a party to litigation incidental
to its business, primarily involving claims for personal injury or property
damages incurred in the transportation of freight. The Company is not aware of
any claims or threatened litigation that might have a material adverse effect on
the Company's consolidated financial position, operations or liquidity.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the three months ended March
31, 1997 was $2.0 million compared with net cash used in operating activities of
$1.9 million for the three months ended March 31, 1996. The increase of $3.9
million was primarily attributable to an increase in working capital activities,
primarily additional cash from the collection of accounts receivable and
favorable activity in accounts payable and accrued expenses. The increase in
working capital activities were partially offset by an increase in net loss of
$1.6 million and a deferred tax benefit for the first quarter of 1997.
9
<PAGE>
Subordinated Notes
In November 1995, AmeriTruck completed a private placement of $100 million of
12 1/4% Senior Subordinated Notes due 2005 (the "Series A Notes"). The Series A
Notes were exchanged for publicly registered 12 1/4% Senior Subordinated Notes
due 2005, Series B (the "Subordinated Notes") in February 1996. The
Subordinated Notes mature on November 15, 2005, and are unsecured subordinated
obligations of the Company. These notes bear interest at the rate of 12.25
percent per annum from November 15, 1995, payable semiannually on May 15 and
November 15 of each year, commencing on May 15, 1996. The Subordinated Notes
are subject to optional redemption on the terms set forth in the Indenture.
NationsBank Credit Facility
In February 1996, the Company and its subsidiaries entered into a Loan
Agreement and related documents (collectively, the "NationsBank Credit
Facility") with NationsBank of Texas, N.A. ("NationsBank") pursuant to which
NationsBank has provided a $30 million credit facility to the Company.
Borrowings under the NationsBank Credit Facility can be used for acquisitions,
operating capital, capital expenditures, letters of credit and general corporate
purposes. Pursuant to the NationsBank Credit Facility, as amended, NationsBank
has provided a $30 million revolving credit facility, with a $7 million sublimit
for letters of credit, maturing on February 1, 1998, at which time the revolving
credit facility will convert into a term loan maturing on February 1, 2003. This
facility is also subject to a borrowing base consisting of eligible receivables
and eligible revenue equipment. Currently, the Company's borrowing base exceeds
$30 million. Borrowings under the NationsBank Credit Facility bear interest at a
per annum rate equal to either NationsBank's base rate or the rate of interest
offered by NationsBank in the interbank eurodollar market plus an additional
margin ranging from 1.5 percent to 2.0 percent based on the Senior Funded Debt
Ratio of the Company. The Company also pays a letter of credit issuance fee and
a quarterly unused facility fee. Borrowings under the NationsBank Credit
Facility were $24.5 million at March 31, 1997 and were primarily used for the
purchase of the Freymiller Assets and the KTL acquisition. Available borrowings
were $4.4 million at March 31, 1997 as there were $1.1 million in letters of
credit outstanding.
The Company's obligations under the NationsBank Credit Facility are
collateralized by substantially all personal property of the Company and its
subsidiaries and are guaranteed in full by each of the Operating Companies. For
purposes of the Indenture, such borrowings under the NationsBank Credit Facility
constitute Senior Indebtedness of the Company and Guarantor Senior Indebtedness
of the Operating Companies.
The NationsBank Credit Facility contains customary representations and
warranties and events of default and requires compliance with a number of
affirmative and negative covenants, including a limitation on the incurrence of
indebtedness and a requirement that the Company maintain a specified Senior
Funded Debt Ratio and Fixed Charge Coverage Ratio.
In May 1997, the Company and its subsidiaries entered into a Loan and
Security Agreement and related documents (collectively, the "FINOVA Credit
Facility") with FINOVA Capital Corporation ("FINOVA") pursuant to which FINOVA
has agreed to provide a $60 million credit facility to the Company. The initial
borrowings under the FINOVA Credit Facility were used to refinance the Company's
prior credit facility with NationsBank of Texas, N.A. Additional borrowings
under the FINOVA Credit Facility can be used for acquisitions, capital
expenditures, letters of credit, working capital and general corporate purposes.
Pursuant to the FINOVA Credit Facility, FINOVA has agreed to provide a $60
million revolving credit facility, with a $10 million sublimit for the issuance
of letters of credit, maturing on May 5, 2000 (subject to additional one year
renewal periods at the discretion of FINOVA). The FINOVA Credit Facility is
also subject to a borrowing base consisting of eligible receivables and eligible
revenue equipment. Currently, the Company's borrowing base supports borrowings
of approximately $42 million. Revolving credit loans under the FINOVA Credit
Facility bear interest at a per annum rate equal to either the prime rate plus a
margin equal to 0.75 percent or the rate of interest offered in the London
interbank market plus a margin equal to 2.75 percent. The Company also pays a
10
<PAGE>
monthly unused facility fee and a monthly collateral monitoring fee in
connection with the FINOVA Credit Facility. Revolving credit loans under the
FINOVA Credit Facility were $26.7 million at May 6, 1997 and were primarily used
for refinancing borrowings under the Company's prior facility with NationsBank
of Texas, N.A. Available borrowings were $13.7 million at May 6, 1997 as there
were $910,000 in letters of credit outstanding.
The Company's obligations under the FINOVA Credit Facility are collateralized
by substantially all of the unencumbered assets of the Company and its
subsidiaries and are guaranteed in full by each of the Operating Companies. For
purposes of the Indenture, the borrowings under the FINOVA Credit Facility
constitute Senior Indebtedness of the Company and Guarantor Senior Indebtedness
of the Operating Companies.
The FINOVA Credit Facility contains customary representations and warranties
and events of default and requires compliance with a number of affirmative,
negative and financial covenants, including a limitation on the incurrence of
indebtedness and requirements that the Company maintain a specified Current
Ratio, Net Worth, Debt Service Coverage Ratio and Operating Ratio.
Volvo Credit Facilities
In February 1996, the Company and its subsidiaries entered into a Loan and
Security Agreement, a Financing Integration Agreement and related documents
(collectively, the "Volvo Credit Facilities") with Volvo Truck Finance North
America, Inc. ("Volvo") pursuant to which Volvo has committed, subject to the
terms and conditions of the Volvo Credit Facilities, to provide (i) a $10
million line of credit facility (the "Volvo Line of Credit") to the Company and
the Operating Companies, and (ii) up to $28 million in purchase money or lease
financing (the "Equipment Financing Facility") in connection with the Operating
Companies' acquisition of new tractors and trailers manufactured by Volvo GM
Heavy Truck Corporation. Borrowings under the Volvo Line of Credit are secured
by certain specified tractors and trailers of the Company and the Operating
Companies (which must have a value equal to at least 1.75 times the outstanding
amount of borrowings under the Volvo Line of Credit) and are guaranteed in full
by each of the Operating Companies. As of March 31, 1997, the Operating
Companies have pledged collateral which provides for a $9.5 million line of
credit. Borrowings under the Volvo Line of Credit bear interest at the prime
rate. The Volvo Line of Credit contains customary representations and
warranties and events of default and requires compliance with a number of
affirmative and negative covenants, including a profitability requirement and a
coverage ratio.
The Equipment Financing Facility is being provided by Volvo in connection
with the Operating Companies' agreement to purchase 400 new trucks manufactured
by Volvo GM Heavy Truck Corporation between March 1, 1996 and June 30, 1997.
The borrowings under the Equipment Financing Facility are collateralized by the
specific trucks being financed and are guaranteed in full by each of the
Operating Companies. Borrowings under this facility bear interest at the prime
rate.
At March 31, 1997, borrowings outstanding under the Volvo Line of Credit were
$9.4 million with available borrowings of $100,000. The outstanding debt
balance under the Equipment Financing Facility was $3.7 million at March 31,
1997; however, available financing under this facility is less than $4 million
as financing was also obtained through operating leases.
The Equipment Financing Facility contains customary representations and
warranties, covenants and events of default. For purposes of the Indenture, the
borrowings under the Volvo Credit Facilities constitute Senior Indebtedness of
the Company and Guarantor Senior Indebtedness of the Operating Companies.
Capital Expenditures and Resources
For the three months ended March 31, 1997, the Company had proceeds from
property and equipment dispositions in excess of capital expenditures of $2.5
million compared with capital expenditures, net of cash proceeds from
dispositions, of $8.4 million for the three months ended March 31, 1996,
excluding the purchase of the Freymiller Assets. The proceeds from property and
equipment dispositions for the first quarter of 1997 were primarily for the
replacement of tractors, some of which were financed through debt, with new
tractors financed through operating leases.
During 1997, the Company plans to purchase approximately 450 new trucks,
including the remaining Volvo trucks. Approximately 300 of these new tractors
will replace existing tractors. These equipment purchases and
11
<PAGE>
commitments will likely be financed using a combination of sources including,
but not limited to, cash from operations, leases, debt issuances and other
miscellaneous sources. Each financing decision will be based upon the most
appropriate alternative available. These plans exclude any new equipment
purchases for acquired companies.
During the third quarter of 1996, AmeriTruck purchased all of the outstanding
stock of KTL, Inc. ("KTL") of Largo, Florida from Ronald N. Damico for a
purchase price of $8.1 million in cash and 225,000 shares of Class A common
stock of AmeriTruck valued at $900,000. As part of the transaction, Mr. Damico
and KTL entered into an employment agreement, under which Mr. Damico became
employed as KTL's President and Chief Executive Officer. 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. 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 for an 18-month term, at which time KTL has agreed
to purchase the property for $2.4 million less the total amount of
environmental-related costs incurred subsequent to August 16, 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. At the time of purchase, KTL
operated approximately 140 tractors and 300 trailers and employed approximately
300 persons, of whom 240 were drivers and many of whom operated as two-driver
teams.
The KTL acquisition was accounted for using the purchase method of
accounting. Accordingly, the purchase price was allocated to the assets
acquired and liabilities assumed based on their estimated fair values at the
date of acquisition. The total purchase price including cash, common stock,
miscellaneous acquisition costs and liabilities assumed was $21.9 million. The
excess of the purchase price over the fair values of the net assets acquired has
been recorded as goodwill.
In February 1996, the Company, through CMS Transportation Services, Inc.,
purchased certain assets of Freymiller Trucking Inc. ("Freymiller") in order to
supplement its existing temperature-controlled trucking business. Freymiller
had been the subject of a Chapter 11 bankruptcy proceeding in Oklahoma. CMS
purchased certain specific automobiles, computer hardware and software,
furniture and fixtures, rights to the trade name "Freymiller", existing spare
parts, tires and fuel, rights under certain leases, certain leasehold
improvements and shop equipment and installment sales contracts relating to
tractors and trailers sold by Freymiller out of the ordinary course of business
(with all of the foregoing referred to as the "Freymiller Assets"). The Company
also negotiated with Freymiller's lenders and lessors to purchase approximately
185 tractors and 309 trailers previously operated by Freymiller for
approximately $14 million. An additional 80 trailers were leased for a seven-
year period. In exchange for the Freymiller Assets, the Company paid
approximately $2.7 million in cash at closing and assumed approximately $2
million in existing equipment financing. In addition, the Company assumed a
lease for Freymiller's maintenance facility in Oklahoma City and certain routine
executory business contracts. Except as provided above, the Company did not
assume any obligations or liabilities of Freymiller.
In connection with these transactions, the Company purchased real property in
Oklahoma City, Oklahoma from Freymiller's Chairman of the Board, President and
Chief Executive Officer for approximately $1.5 million in cash.
In April 1996, CMS Transportation Services, Inc. changed its corporate name
to "AmeriTruck Refrigerated Transport, Inc." ("ART"), and the distribution
functions previously conducted under the corporate name "CMS Transportation
Services, Inc." were continued as a division of ART. In addition, in June 1996,
the business operations of CBS, a general freight carrier (which then operated
under the name "CBS Express, Inc."), were transferred to Scales. In December
1996, the distribution functions of the CMS Transportation division of ART were
transferred to CBS and its name was changed to "CMS Transportation Services,
Inc." ("CMS").
Opportunistic Acquisitions
The Company will pursue opportunistic acquisitions to broaden its geographic
scope, to increase freight network density and to expand into other specialized
trucking segments. Through acquisitions, the Company believes it can capture
additional market share and increase its driver base without adopting a growth
strategy based on widespread rate discounting and driver recruitment, which the
Company believes would be less successful. The Company believes its large size
relative to many other potential acquirers could afford it greater access to
acquisition financing sources such as banks and capital markets. AmeriTruck has
entered into revolving credit facilities,
12
<PAGE>
the Volvo Line of Credit and the FINOVA Credit Facility, which will give
AmeriTruck the ability to pursue acquisitions that the Company could not
otherwise fund through cash provided by operations. In addition to revolving
credit facilities, the Company may finance its acquisitions through equity
issuances, seller financing and other debt financings.
Subsequent to March 31, 1997, the Company has signed a definitive agreement
to acquire the capital stock of Tran-Star, Inc. ("Tran-Star") which is owned by
Allways Services, Inc. Tran-Star is a carrier of refrigerated and non-
refrigerated products. Tran-Star had 1996 revenues of $68.5 million. The
purchase price for this acquisition is $3.8 million, payable in cash. The
Company also would assume or refinance indebtedness estimated at approximately
$30 million. In addition, under the terms of the agreement the Company would
lease a terminal at Etters, Pennsylvania from a Tran-Star affiliate for one
year, and purchase the property at the end of the lease term for $500,000, less
any environmental remediation costs incurred by the Company or Tran-Star in
connection with the property. If this acquisition is completed, the Company
intends to coordinate Tran-Star's activities with those of the other Operating
Companies. Tran-Star, headquartered in Waupaca, Wisconsin, operates primarily in
between the upper midwestern U.S. and the northeast and southeast, with
terminals at Etters and Scranton, Pennsylvania.
The Company has also signed a definitive agreement with subsidiaries of
ConAgra, Inc. ("ConAgra") to acquire the capital stock of Monfort Transportation
Company ("Monfort Transportation") and Lynn Transportation Co., Inc. ("Lynn
Transportation"). Monfort Transportation and Lynn Transportation operate
primarily as in-house carriers for the red meat division of Monfort, Inc., a
ConAgra subsidiary, and the poultry and turkey divisions of ConAgra Poultry
Company, a ConAgra subsidiary. Under the terms of this Agreement the purchase
price is $15 million, payable in cash. The Company would also sublease certain
operating equipment from ConAgra or its subsidiaries. Under the terms of the
proposed acquisition, AmeriTruck would enter into a Transportation Services
Agreement with subsidiaries of ConAgra. Under the terms of this agreement, these
ConAgra subsidiaries would agree to tender freight from Monfort, Inc.'s red meat
division, ConAgra Poultry Company's poultry and turkey divisions and Swift-
Eckerich, Inc.'s processed meats division in designated lanes and minimum annual
volumes. The agreement would have a four year term, with pricing fixed for the
first two years and to be adjusted for the third and fourth years.
The Company intends to complete both the Tran-Star acquisition and the
acquisitions from ConAgra by the end of May. However, these acquisitions are
subject to a number of conditions and no assurances can be made that the Company
will complete these acquisitions.
The Company believes that these acquisitions, if completed, would provide the
Company with a number of opportunities for improving operating efficiencies,
including the potential for increased load ratios, improvements in purchasing,
and improved equipment utilization and productivity. However, there can be no
assurances that the Company will achieve these goals. See "Forward Looking
Statements and Risk Factors."
The Company is a holding company with no operations of its own. The
Company's ability to make required interest payments on the Subordinated Notes
depends on its ability to receive funds from the Operating Companies. The
Company, at its discretion, controls the receipt of dividends or other payments
from the Operating Companies.
OTHER MATTERS
Inflation and Fuel Costs
Inflation can be expected to have an impact on the Company's earnings.
Extended periods of escalating cost or fuel price increases without freight rate
increases would adversely affect the Company's results of operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations Expenses."
The industry as a whole has seen dramatic increases in fuel prices.
According to a Department of Energy survey, reported by the American Trucking
Association, the average price of diesel fuel peaked during the month of October
at $1.329 and has decreased to only $1.225 as of March 31, 1997. According to
the survey, the average price of diesel fuel for the first quarter of 1997 was
approximately 10 cents above the average price for the first quarter of 1996.
The Company has seen its fuel prices increase at a rate slightly below the
national average due to the Company's ability to buy fuel at volume discounts.
13
<PAGE>
FORWARD LOOKING STATEMENTS AND RISK FACTORS
From time to time, the Company issues statements in public filings (including
this Form 10-Q) or press releases, or officers of the Company make public oral
statements with respect to the Company, that may be considered forward-looking
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Such forward-looking statements in this
Form 10-Q include statements concerning future cost savings, projected levels of
capital expenditures and the timing of deliveries of new trucks and trailers,
the Company's financing plans, driver recruitment and training and the Company's
pursuit of opportunistic acquisitions. These forward-looking statements are
based on a number of risks and uncertainties, many of which are beyond the
Company's control. The Company believes that the following important factors,
among others, could cause the Company's actual results for its 1997 fiscal year
and beyond to differ materially from those expressed in any forward-looking
statements made by, on behalf of, or with respect to, the Company: the adverse
impact of inflation and rising fuel costs; the Company's substantial leverage
and its effect on the Company's ability to pay principal and interest on the
Subordinated Notes, to pursue other business opportunities and to withstand any
adverse economic and industry conditions; the risk that the Company will not be
able to integrate the Operating Companies' businesses on an economic basis or
that any anticipated economies of scale or other cost savings will be realized;
the ability of the Company to identify suitable acquisition candidates, complete
acquisitions or successfully integrate any acquired businesses; competition; the
ability of the Company to attract and retain qualified drivers; and the
Company's dependence on key management personnel.
These and other applicable risk factors are discussed in more detail in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 and
other filings the Company has made with the Securities and Exchange Commission
and are incorporated by reference.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and its subsidiaries are a party to litigation incidental to its
business, primarily involving claims for personal injury or property damages
incurred in the transportation of freight. The Company is not aware of any
claims or threatened litigation that might have a material adverse effect on the
Company's consolidated, financial position, operations or liquidity.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
The following exhibits are filed as part of this report:
Exhibit Number Description
-------------- -----------
10.1 Stock Purchase Agreement, dated as of March 31,
1997, between the Company, Allways Services, Inc.
and Transtar Services, Inc.
12 Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
B. Reports on Form 8-K
During the first quarter of 1997, there were no reports filed on Form 8-K.
Items 2, 3, 4 and 5 of Part II were not applicable and have been omitted.
15
<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, thereunto 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: May 15, 1997
16
<PAGE>
AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES
EXHIBIT INDEX
Page
Exhibit Number Description Number
- -------------- ----------- ------
10.1 Stock Purchase Agreement, dated as of
March 31, 1997, between the Company,
Allways Services, Inc. and Transtar
Services, Inc.
12 Computation of Ratio of Earnings to
Fixed Charges
27 Financial Data Schedule
<PAGE>
EXHIBIT 10.1
EXECUTION COPY
--------------
STOCK PURCHASE AGREEMENT
BY AND AMONG
AMERITRUCK DISTRIBUTION CORP.,
the Buyer
ALLWAYS SERVICES, INC.,
the Seller
and
TRANSTAR SERVICES, INC.
Dated as of March 31, 1997
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
Table of Contents
----- -- --------
Section Page
------- ----
1. PURCHASE AND SALE OF STOCK.......................................... 1
1.1. Purchase and Sale............................................. 1
1.2. Delivery of Purchase Price.................................... 1
2. CLOSING............................................................. 2
2.1. Time and Place................................................ 2
2.2. Transactions at Closing....................................... 2
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND SERVICES........... 3
3.1. Organization; Authority....................................... 3
3.2. Rights to Sell Outstanding Shares, Approvals; Binding Effect.. 3
3.3. Subsidiaries.................................................. 4
3.4. Capitalization................................................ 4
3.5. Title to Stock, Liens, Etc.................................... 4
3.6. Non-Contravention............................................. 4
3.7. Governmental Consents; Transferability of Licenses, Etc....... 4
3.8. Financial Statements.......................................... 5
3.9. Absence of Certain Changes.................................... 5
3.10. Litigation, Etc............................................... 6
3.11. Conformity to Law............................................. 6
3.12. Title to Property, Real Property Leases, Etc.................. 6
3.13. Real Property; Safety, Zoning and Environmental Matters....... 7
3.14. Insurance..................................................... 9
3.15. Contracts..................................................... 10
3.16. Employment of Officers, Employees............................. 11
3.17. Employee Benefit Plans........................................ 11
3.18. Labor Relations............................................... 14
3.19. Potential Conflicts of Interest............................... 14
3.20. Trademarks, Patents, Etc...................................... 14
3.21. Supplies and Customers........................................ 15
3.22. Accounts Receivable........................................... 15
3.23. No Undisclosed Liabilities.................................... 15
<PAGE>
-ii-
3.24. Conduct of Business........................................... 16
3.25. Taxes......................................................... 16
3.26. Indebtedness.................................................. 16
3.27. Bank Accounts, Signing Authority, Powers of Attorney.......... 17
3.28. Inventory..................................................... 17
3.29. Minute Books.................................................. 17
3.30. Broker........................................................ 17
3.31. Disclosure.................................................... 17
4. REPRESENTATIONS AND WARRANTIES OF BUYER............................. 17
4.1. Organization of Buyer; Authority.............................. 17
4.2. Corporate Approval; Binding Effect............................ 18
4.3. Non-Contravention............................................. 18
4.4. Governmental Consents......................................... 18
4.5. Broker........................................................ 18
4.6. Securities Laws............................................... 18
4.7. Operation of Tran-Star........................................ 18
5. CONDUCT OF BUSINESS BY TRANSTAR PENDING CLOSING..................... 19
5.1. Full Access................................................... 19
5.2. Carry on in Regular Course.................................... 19
5.3. No General Increases.......................................... 19
5.4. No Dividends, Issuances, Repurchases, Etc..................... 19
5.5. Contracts and Commitments..................................... 19
5.6. Purchase and Sale of Capital Assets........................... 20
5.7. Insurance..................................................... 20
5.8. Preservation of Organization.................................. 20
5.9. No Default.................................................... 20
5.10. Compliance with Laws.......................................... 20
5.11. Advice of Change.............................................. 20
5.12. No Shopping................................................... 20
5.13. Consent of Third Parties...................................... 20
5.14. Satisfaction of Conditions Precedent.......................... 21
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS......................... 21
6.1. Representations and Warranties True at Closing................ 21
6.2. Compliance with Agreement..................................... 21
6.3. No Material Change............................................ 21
6.4. Seller's Certificate.......................................... 21
6.5. Opinion of Counsel............................................ 21
6.6. Required Approvals............................................ 21
<PAGE>
-iii-
6.7. No Litigation................................................. 22
6.8. Non-Competition Agreements.................................... 22
6.9. Employment Agreements......................................... 22
6.10. Resignations of Directors and Officers........................ 22
6.11. Environmental Report.......................................... 22
6.12. Title Insurance............................................... 22
6.13. Indebtedness.................................................. 22
6.14. Financing..................................................... 22
6.15. Due Diligence................................................. 23
6.16. Schedules..................................................... 23
6.17. Specified Reserves............................................ 23
6.18. Consents of Third Parties..................................... 23
6.19. Proceedings and Documents Satisfactory........................ 23
7. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATIONS.................... 23
7.1. Representations and Warranties True at Closing................ 23
7.2. Compliance with Agreement..................................... 23
7.3. Closing Certificate........................................... 23
7.4. H-S-R......................................................... 24
7.5. Opinion of Counsel............................................ 24
7.6. Required Approvals............................................ 24
7.7. No Litigation................................................. 24
7.8. Proceedings and Documents Satisfactory........................ 24
8. CONFIDENTIAL INFORMATION............................................ 24
9. INDEMNIFICATION..................................................... 25
9.1. Indemnity by Seller and Services.............................. 25
9.2. Indemnity by the Buyer........................................ 25
9.3. Materiality Standards......................................... 26
9.4. Time Limitation............................................... 26
9.5. Limitations on Indemnification................................ 27
9.6. Net Recovery.................................................. 27
9.7. Unused Reserves............................................... 28
9.8. Claims........................................................ 28
9.9. Method and Payment of Claims.................................. 29
10. TERMINATION........................................................ 29
<PAGE>
-iv-
11. DEFINITIONS........................................................ 29
Affiliate.......................................................... 29
GAAP............................................................... 29
Indebtedness....................................................... 30
IRS................................................................ 30
Person............................................................. 30
State.............................................................. 30
Subsidiary......................................................... 30
12. GENERAL............................................................ 31
12.1. Survival of Representations and Warranties.................. 31
12.2. Consent to Jurisdiction..................................... 31
12.3. Expenses.................................................... 31
12.4. Notices..................................................... 31
12.5. Entire Agreement............................................ 32
12.6. Governing Law............................................... 32
12.7. Sections and Section Headings............................... 32
12.8. Assigns..................................................... 33
12.9. Severability................................................ 33
12.10. Further Assurances.......................................... 33
12.11. No Implied Rights or Remedies............................... 33
12.12. Counterparts................................................ 33
12.13. Satisfaction of Conditions Precedent........................ 33
12.14. Public Statements or Releases............................... 33
12.15. Construction................................................ 34
12.16. Disclosure in Schedules..................................... 34
<PAGE>
-v-
LIST OF SCHEDULES AND EXHIBITS
------------------------------
Schedules:
- ----------
3.3. Subsidiaries
3.4. Capitalization
3.7. Governmental Consents; Transferability of Licenses, Etc.
3.8. Financial Statements
3.9. Absence of Certain Changes
3.10. Litigation, Etc.
3.11. Conformity to Law
3.12(a) Title to Property
3.12(b) Capital Assets
3.12(c) Real Property Leases
3.13. Real Property; Safety, Zoning and Environmental Matters
3.14. Insurance
3.15. Contracts
3.16. Employment of Officers, Employees
3.17(a) Employee Benefit Plans
3.17(d) Employee Benefit Plan Disclosure
3.18. Labor Relations
3.19. Potential Conflicts of Interest
3.20. Trademarks, Patents, Etc.
3.21. Supplies and Customers
3.24. Conduct of Business
3.25. Taxes
3.26. Indebtedness
3.27. Bank Accounts, Signing Authority, Powers of Attorney
6.10. Resignations of Directors and Officers
Exhibits
- --------
Exhibit A Lease Agreement
Exhibit B-1 to B-3 Non-Competition Agreements
Exhibit C Opinion of counsel to Seller, Tran-Star, and Services
Exhibit D Opinion of counsel to Buyer
<PAGE>
STOCK PURCHASE AGREEMENT
----- -------- ---------
THIS STOCK PURCHASE AGREEMENT is dated as of the 31st day of March, 1997 by
and among AmeriTruck Distribution Corp., a Delaware corporation (the "Buyer"),
-----
Allways Services, Inc., a Tennessee corporation (the "Seller"), and Transtar
------
Services, Inc., a Delaware corporation ("Services").
--------
The Seller is the owner of all of the issued and outstanding capital stock
of Tran-Star, Inc., a Wisconsin corporation ("Tran-Star").
---------
The Seller desires to sell all of the capital stock of Tran-Star (the
"Stock") to the Buyer and the Buyer desires to purchase the Stock from the
- ------
Seller, upon the terms and subject to the conditions contained in this
Agreement.
The Seller will retain ownership of the capital stock of ProShell, Inc., a
Delaware corporation (f/k/a as "Proline Carriers Inc." and referred to herein as
"ProShell"), and Services.
--------
In connection with the transactions contemplated hereby Services will enter
into a real property lease with Tran-Star and wishes to induce the Buyer to
enter into this Agreement.
In connection with the negotiation and preparation of this Agreement, the
Seller will prior to the Closing prepare a set of disclosure schedules, dated
the Closing Date and delivered separately as one or more volumes (the
"Disclosure Schedule", with any reference to a Schedule being to the Disclosure
- --------------------
Schedule). Certain defined terms used in this Agreement are defined in Article
11.
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, the parties hereto agree as follows:
1. PURCHASE AND SALE OF 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 referred to in Article 2 of this
Agreement, all of the outstanding shares of Stock, in exchange for the payment
of the aggregate Purchase Price as described below.
1.2. Delivery of Purchase Price. At the Closing, the Buyer shall pay the
-------- -- -------- -----
aggregate purchase price for the Stock, $3,750,000, (the "Purchase Price"), as
-------- -----
provided herein.
<PAGE>
-2-
2. CLOSING.
2.1. Time and Place. The closing of the sale and purchase of the Stock
---- --- -----
(the "Closing") shall be held at the offices of Buyer, 301 Commerce Street,
-------
Suite 1101, Fort Worth, Texas, at 10:00 a.m. on April 30, 1997, or at such other
time, 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".
------- ----
2.2. 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 Stock, duly endorsed in
blank or with duly executed stock powers attached.
(b) The Seller shall deliver to Buyer at Closing an agreement (the
"Norfolk Southern Settlement") by Norfolk Southern Corporation, in form and with
- ----------------------------
terms and conditions satisfactory to Buyer, under which Norfolk Southern
Corporation will agree to accept the payment of an amount, not to exceed
$3,000,000, in full settlement and satisfaction of all Indebtedness (as defined
in Article 11) owed to Norfolk Southern Corporation by the Seller and its
Subsidiaries (as defined in Article 11) and the extinguishment of all equity
interests or any warrants or other rights to acquire any equity interests in the
Seller held by Norfolk Southern Corporation, to be paid from the Purchase Price.
(c) The Seller shall deliver the amount referred to in paragraph (b)
above to Norfolk Southern Corporation by certified or bank check or by wire
transfer, as a disbursement from the Purchase Price.
(d) Tran-Star and Services shall enter into the Lease Agreement in
substantially the form of Exhibit A hereto (the "Lease Agreement") for Services'
--------- ---------------
real property in Etters, Pennsylvania.
(e) The stockholders of the Seller shall enter into a stock redemption
agreement (the "Stock Redemption Agreement") upon such terms and conditions as
--------------------------
may be acceptable as between them and to the Buyer, and the Seller shall deliver
a copy of said agreement to Buyer at Closing.
(f) The Buyer shall deliver the remainder of the Purchase Price, to
the Seller by certified or bank check or by wire transfer.
(g) The Seller shall deliver to the Buyer pay-off letters and lien
discharges (or agreements therefor) from any lender to whom Tran-Star owes any
Indebtedness in excess of $5,000 secured by any lien on any property of Tran-
Star.
<PAGE>
-3-
(h) Each of Robert Goldberg, Daniel Van Alstine, Terry Wallace and
Paul Herzog (the "Managers") shall execute and deliver an Employment Agreement
--------
in a form mutually satisfactory to the Managers and the Buyer (in such form, the
"Employment Agreements").
---------------------
(i) The Seller, Services and ProShell shall enter into Non-Competition
Agreements with Buyer in the form of Exhibits B-1 to B-3 hereto (the "Non-
--- --- ---
Competition Agreements").
- ----------------------
(j) The Buyer, the Seller and Services shall enter into a Tax
Indemnification Agreement in a mutually acceptable form (the "Tax Agreement").
-------------
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER AND SERVICES. The Seller
and the Services jointly and severally represent and warrant to the Buyer as
follows:
3.1. Organization; Authority. (a) Each of the Seller and Services is a
------------ ---------
corporation duly organized, validly existing and in good standing under the laws
of the States of Tennessee and Delaware, respectively, and has full corporate
power and authority to enter into this Agreement and the agreements contemplated
hereby and to perform its obligations hereunder and thereunder.
(b) Tran-Star is a corporation duly organized, validly existing and in
good standing under the laws of the State of Wisconsin and 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 Tran-Star's Articles of Incorporation
and By-Laws and all amendments thereto. Tran-Star 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.
3.2. Rights to Sell Outstanding Shares, Approvals; Binding Effect. The
------ -- ---- ----------- ------- --------- ------- ------
Seller and Services have all requisite power and full legal right to enter into
this Agreement, the Norfolk Southern Settlement, the Lease Agreement, the Stock
Redemption Agreement, the Tax Agreement and the Non-Competition Agreement
(collectively, the "Transaction Agreements"), if any, to which it is a party, to
----------------------
perform all of the Seller's or Services agreements and obligations hereunder and
thereunder, each in accordance with its respective terms, and to sell to the
Buyer all of the outstanding shares of Stock owned by the Seller. This
Agreement has been duly executed and delivered by the Seller and Services and
constitutes, and each of the other Transaction Agreements to which the Seller or
Services is to be a party will at or prior to the Closing have been duly
executed and delivered by the Seller or Services, as applicable, and will
constitute, the legal, valid and binding obligation of the Seller or Services
enforceable against the Seller and Services in accordance with its terms, except
as the enforceability thereof may be limited by any applicable bankruptcy,
<PAGE>
-4-
reorganization, insolvency or other laws affecting creditors' rights generally
or by general principles of equity.
3.3. Subsidiaries. Except as set forth on Schedule 3.3, Tran-Star has no
------------ ------------
Subsidiaries and does not own or hold of record and/or beneficially any shares
of any class in the capital of any corporations, and neither owns any legal
and/or beneficial interests in any partnerships, business trusts or joint
ventures or in any other unincorporated trade or business enterprises.
3.4. Capitalization. The authorized capital of Tran-Star consists of
--------------
2,800 shares of common stock, no par value per share, 206 shares of which are
issued and outstanding on the date hereof. All of the Stock will be sold by the
Seller to the Buyer pursuant hereto and is validly issued and outstanding, fully
paid and non-assessable. Except as set forth on Schedule 3.4 hereto, 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 Tran-Star or any of its
Subsidiaries.
3.5. 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 Stock, free and clear of any mortgage, lien, pledge,
charge, security interest, encumbrance, title retention agreement, option,
equity or other adverse claim thereto.
3.6. Non-Contravention. The execution and delivery of this Agreement and
--- -------------
the other Transaction Agreements to which the Seller or Services is or is to be
a party and the consummation by the Seller and Services 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 Seller, Tran-Star
or any of its Subsidiaries or Services, 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 Seller, Tran-Star or Services pursuant to (i) any agreement
or instrument to which the Seller, Tran-Star or any of its Subsidiaries or
Services is a party or by which any of their properties is bound, or (ii) any
statute, judgment, decree, order, regulation or rule of any court or
governmental or regulatory authority to which the Seller, Services or Tran-Star
is subject, except in the case of (i) or (ii) for any violations, conflicts,
defaults or encumbrances that individually and in the aggregate will not have a
material adverse effect on the operations, assets, business, condition
(financial or otherwise) or prospects of Tran-Star and its Subsidiaries taken as
a whole or any material adverse effect on the ability of the Seller to perform
its obligations under this Agreement and the other Transaction Agreements to
which it is a party (with either of the foregoing referred to as a "Material
--------
Adverse Effect").
- --------------
3.7. Governmental Consents; Transferability of Licenses, Etc. Except as
------------ -------- --------------- -- -------- ---
set forth on Schedule 3.7, 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 or Services of this
Agreement and the other Transaction Agreements to which the
<PAGE>
-5-
Seller or Services is or is to be a party or for the consummation by the Seller
and Services of the transactions contemplated hereby or thereby. Tran-Star and
its Subsidiaries have and maintain, and the permits listed on Schedule 3.7
-------- ---
hereto include, all licenses, permits and other authorizations from all
governmental authorities (collectively, the "Permits") as are necessary for the
-------
conduct of the business of Tran-Star and its Subsidiaries. Except as expressly
designated on Schedule 3.7, all of the Permits will remain in effect after the
-------- ---
transfer of the Stock to the Buyer, and true and complete copies of such Permits
have previously been delivered to the Buyer.
3.8. Financial Statements. The Seller has delivered the following
--------- ----------
financial statements (the "Financial Statements") to the Buyer, and there are
--------- ----------
attached as Schedule 3.8 hereto: (a) the audited balance sheets of Tran-Star as
-------- ---
of December 31, 1994, 1995 and 1996 (such balance sheets as of December 31,
1994, 1995 and 1996 being referred to herein as the "Audited Balance Sheets"),
------- ------- ------
and the related statements of income, retained earnings and cash flows of Tran-
Star for each of the fiscal years then ended and (b) the unaudited balance sheet
of Tran-Star as of January 31, 1997 and the related statements of income,
retained earnings and cash flows of Tran-Star for the one-month period ended
(collectively, the "Interim Financials"). Each of the Financial Statements are
------- ----------
true and correct 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 accruals); each of such balance sheets fairly and accurately presents
the financial condition of Tran-Star as of its respective date; and such
statements of income, retained earnings and cash flows fairly and accurately
present the results of operations for the periods covered thereby.
3.9. Absence of Certain Changes. Except as set forth on Schedule 3.9,
------- -- ------- ------- -------- ---
since December 31, 1996 Tran-Star and its Subsidiaries have carried on their
business only in the ordinary course, and there has not been (a) any change in
the assets, liabilities, sales, income or business of Tran-Star and its
Subsidiaries taken as a whole or in their relationships with suppliers,
customers or lessors, other than changes in the ordinary course of business that
individually and in the aggregate will not have a Material Adverse Effect; (b)
any acquisition or disposition by Tran-Star or its Subsidiaries of any asset or
property other than in the ordinary course of business or dispositions of assets
and properties outside the ordinary course of business that individually and in
the aggregate do not represent a material portion of the assets and properties
of Tran-Star and its Subsidiaries; (c) except for trucks and trailers that are
receiving maintenance or repair in the ordinary course of business and at levels
in the aggregate consistent with Tran-Star's experience in the last twelve (12)
months, any damage, destruction or loss, whether or not covered by insurance, of
any property or asset; (d) any declaration, setting aside or payment of any
dividend or any other distributions in respect of the Stock; (e) any issuance of
any shares of the capital stock of Tran-Star or its Subsidiaries or any direct
or indirect redemption, purchase or other acquisition of any of the Stock or the
capital stock of any of its Subsidiaries, (f) except pursuant to the terms of
any Employee Benefit Plan (as defined in Section 3.17) and except for annual
merit increases to non-officer employees made consistent with past practices,
any increase in the compensation, pension or other benefits payable or to become
payable by Tran-Star or its
<PAGE>
-6-
Subsidiaries to any of their officers or employees, or any bonus payments or
arrangements made to or with any of them; (g) any forgiveness or cancellation of
any debt or claim by Tran-Star or its Subsidiaries 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 Tran-Star or its Subsidiaries into any
transaction other than transactions made in the ordinary course of business and
any transactions made outside the ordinary course of business but which
individually and in the aggregate are not material to Tran-Star and its
Subsidiaries taken as a whole; (i) any incurrence by Tran-Star or its
Subsidiaries 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 Tran-Star or its Subsidiaries; or (k) any
discharge or satisfaction by Tran-Star or its Subsidiaries of any lien or
encumbrance or payment by Tran-Star or its Subsidiaries of any obligation or
liability (fixed or contingent) other than (A) current liabilities included in
the Audited Balance Sheets and (B) current liabilities incurred since the date
of the Audited Balance Sheets in the ordinary course of business.
3.10. Litigation, Etc. Except as set forth on Schedule 3.10 hereto, no
---------- --- -------- ----
action, suit, proceeding or investigation is pending or to Seller's knowledge
threatened against Tran-Star or its Subsidiaries (nor is there any reasonable
basis therefor known to the Seller).
3.11. Conformity to Law. Except as set forth on Schedule 3.11, Tran-Star
---------- -- --- -------- ----
and its Subsidiaries have complied with, and are in compliance with (a) all
laws, statutes, governmental regulations and all judicial or administrative
tribunal orders, judgments, writs, injunctions, decrees or similar commands
applicable to Tran-Star or any of its Subsidiaries or any of their 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 Tran-Star or any
of its Subsidiaries is a party, or by which Tran-Star or any of its Subsidiaries
or any of their properties is subject, except for any instances of non-
compliance that individually and in the aggregate will not have Material Adverse
Effect. Except as set forth in Schedule 3.11 hereto, neither Tran-Star nor any
-------- ----
of its Subsidiaries have committed, been charged with, or to Seller's knowledge
been under investigation with respect to, nor does there exist, any violation of
any provision of any federal, state or local law or administrative regulation in
respect of Tran-Star or any of its Subsidiaries or any of their properties,
except for any instances of violation that individually and in the aggregate
will not have a Material Adverse Effect.
3.12. Title to Property, Real Property Leases, etc. (a) Except as set
----- -- -------- -------------------- ---
forth on Schedule 3.12(a) hereto, Tran-Star and it Subsidiaries have good and
-------- -------
marketable title to all of their properties and assets, including, without
limitation, all those reflected in the Audited Balance Sheets (except for
properties or assets sold or otherwise disposed of in the ordinary course of
business since the date of the Audited Balance Sheets), all free and clear of
all
<PAGE>
-7-
liens, pledges, charges, security interests, encumbrances or title retention
agreements of any kind or nature.
(b) Schedule 3.12(b) hereto lists all real property owned or leased by
-------- -------
Tran-Star or any of its Subsidiaries (the "Real Property"). None of the Seller,
---- --------
Tran-Star and or any of its Subsidiaries or Services has received any notice
that either the whole or any portion of the Real Property is to be condemned,
requisitioned or otherwise taken by any public authority. None of the Seller,
Tran-Star or any of its Subsidiaries or Services has any knowledge of any public
improvements that may result in special assessments against or otherwise affect
any of the Real Property. Schedule 3.12(c) hereto sets forth a complete and
-------- -------
correct description of all leases of Real Property to which Tran-Star or any of
its Subsidiaries or Services are a party. Complete and correct copies of all
such leases have been delivered to the Buyer. Each such lease 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. The leasehold
interests of Tran-Star and its Subsidiaries and Services are subject to no lien
or other encumbrance (other than liens on the underlying fee simple interest),
and Tran-Star and its Subsidiaries and Services are in quiet possession of the
properties covered by such leases.
(c) To the Seller's knowledge, all of the buildings and other
improvements located on the Real Property are in structurally sound condition
and in compliance with any local building codes or ordinances. Schedule 3.12(d)
----------------
lists all tractors and trailers owned or leased by Tran-Star or its Subsidiaries
as of March 31, 1997. Except for trucks and trailers that are receiving
maintenance or repair in the ordinary course of business and at levels in the
aggregate consistent with Tran-Star's experience in the last twelve (12) months,
all such tractors and trailers are in good condition and repair, reasonable wear
and tear excepted, and all of such tractors and trailers subject to leases have
been maintained in compliance in all material respects with the terms of the
applicable leases. All other tangible assets of Tran-Star and its Subsidiaries
are, in the aggregate, in good condition and repair, reasonable wear and tear
excepted, and adequate for their present use.
3.13. Real Property; Safety, Zoning and Environmental Matters.
---- -------- ------ ------ --- ------------- -------
(a) Schedule 3.13 hereto sets forth complete and accurate legal
-------- ----
descriptions of all of the Real Property.
(b) Except as set forth on Schedule 3.13, to the best of Seller's
-------- ----
knowledge:
(i) neither Tran-Star or any of its Subsidiaries, the Seller,
Services nor any operator of any real property presently or formerly owned,
leased or operated by Tran-Star or any of its Subsidiaries or Services 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
------
<PAGE>
-8-
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) none of the Seller, Tran-Star or any of its Subsidiaries or
Services has received notice from any third party, including without
limitation any federal, state or local governmental authority, (A) that
Tran-Star or any of its Subsidiaries, Services or the Seller 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 Tran-Star or any of its Subsidiaries, Services or the
----------
Seller 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 Tran-Star or any of its
Subsidiaries, Services or the Seller or any predecessor in interest
conduct a remedial investigation, removal or other response action pursuant
to any Environmental Law; or (C) that Tran-Star or any of its Subsidiaries,
Services or the Seller 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;
(iii) (A) no portion of any real property presently or formerly
owned, leased or operated by Tran-Star or any of its Subsidiaries, Services
or the Seller has been used for the handling, manufacturing, processing,
storage or disposal of Hazardous Substances except in accordance with
applicable Environmental Laws; and no underground tank or other underground
storage receptacle for Hazardous Substances is located on such properties;
(B) in the course of any activities conducted by Tran-Star or any of its
Subsidiaries, Services or the Seller or operators of any real property
presently or formerly owned, leased or operated by Tran-Star or any of its
Subsidiaries, Services or the Seller, no Hazardous Substances have been
generated or are being used on such properties except in accordance with
applicable Environmental Laws; (C) all real properties presently or
formerly owned, leased or operated by Tran-Star or any of its Subsidiaries,
Services or the Seller are free from contamination of every kind, including
without limitation, groundwater, surface 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
<PAGE>
-9-
Environmental Law, or which poses a hazard to the health and safety of the
occupants of such properties or those adjacent thereto; (D) there have been
no 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 Tran-Star or any of its Subsidiaries or Services 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 Tran-Star
or any of its Subsidiaries, Services or the Seller 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 Tran-Star or any of its Subsidiaries, Services or the Seller
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 knowledge of the Seller, operating in compliance with
such permits and applicable Environmental Laws; and
(iv) no real property presently or formerly owned, leased or
operated by Tran-Star or any of its Subsidiaries, Services or the Seller is
or shall be subject to any applicable environmental cleanup responsibility
law or environmental restrictive transfer law or regulation, by virtue of
the transactions set forth herein and contemplated hereby.
(d) Attached as part of Schedule 3.13 is a list of all documents,
-------- ----
reports, site assessments, data, communications or other materials, in Tran-
Star's or any of its Subsidiaries', Services' or the Seller's actual possession
or to which any of them 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 Tran-Star or any of its
Subsidiaries, Services or the Seller 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 3.13 hereto.
-------- ----
3.14. Insurance. Schedule 3.14 hereto lists all policies of fire,
--------- -------- ----
liability, workmen's compensation, life, property and casualty and other
insurance owned or held by Tran-Star or any of its Subsidiaries or maintained
for their benefit. Such policies of insurance are maintained with 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. All such policies (a) are in full
force and effect, (b) are sufficient for compliance by Tran-Star and its
Subsidiaries with all requirements of law and all agreements to which Tran-Star
or any of its Subsidiaries is a
<PAGE>
-10-
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 contemplated
by this Agreement. Except as set forth on Schedule 3.14, neither Tran-Star nor
-------- ----
any of its Subsidiaries is 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.
3.15. Contracts. Schedule 3.15 sets forth a complete and accurate list of
--------- -------- ----
all material contracts to which Tran-Star or any of its Subsidiaries is a party
or by which any of them or any of their 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 Tran-Star or
the applicable Subsidiary 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 3.15, the word "material contract" means and
-----------------
includes every material agreement or material understanding of any kind, written
or oral, which is legally enforceable by or against Tran-Star or any of its
Subsidiaries, and specifically includes:
(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) except for contracts to provide freight services in the ordinary
course of business, any contracts and other agreements for the provision of
services by Tran-Star or any of its Subsidiaries with a value in excess of
$15,000;
(d) bonds or other security agreements provided by any party in
connection with the business of Tran-Star or any of its Subsidiaries;
(e) contracts and other agreements for the sale of any of the assets
or properties of Tran-Star or any of its Subsidiaries other than in the ordinary
course of business or for the grant to any person of any preferential rights to
purchase any of said assets or properties;
(f) joint venture agreements relating to the assets, properties or
business of Tran-Star or any of its Subsidiaries or by or to which either of
them or any of their assets or properties are bound or subject;
(g) except for contracts to provide freight services in the ordinary
course of business, any contracts or other agreements under which Tran-Star or
any of its Subsidiaries agrees to indemnify any party;
<PAGE>
-11-
(h) contracts or other agreements under which Tran-Star or any of its
Subsidiaries agrees to share tax liability of any party or to refrain from
competing with any party;
(i) any contracts or other agreements with regard to Indebtedness; (j)
any capital or operating lease for any tractors or trailers used by Tran-Star or
any of its Subsidiaries; and
(k) any other contract or other agreement whether or not made in the
ordinary course of business and involving the payment by or to Tran-Star or any
of its Subsidiaries in excess of $15,000.
The Seller has delivered 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 3.15 hereto or any of the other
-------- ----
Schedules hereto is in full force and effect. Neither Tran-Star nor any of its
Subsidiaries is in breach of any of the provisions of any such contract, nor, to
the knowledge of the Seller, 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, except for any
breaches or defaults that individually and in the aggregate will not have a
Material Adverse Effect. Tran-Star and its Subsidiaries have in all material
respects performed all obligations required to be performed by them to date
under each such contract. No approval or consent of any person is needed in
order that the contracts listed on Schedule 3.15 and other Schedules hereto
-------- ----
continue in full force and effect following the consummation of the transactions
contemplated by this Agreement, and no such contract includes any provision the
effect of which may be to enlarge or accelerate any obligations of Tran-Star or
any of its Subsidiaries 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.
3.16. Employment of Officers, Employees. Schedule 3.16 sets forth the
---------- -- -------- --------- -------- ----
name and current annual salary and other compensation payable by Tran-Star or
any of its Subsidiaries to each exempt non-hourly employee whose current total
annual compensation or estimated compensation from Tran-Star or any of its
Subsidiaries (including but not limited to wages, salary, commissions, normal
bonus, profit sharing, deferred compensation and other extra compensation) is
$10,000 or more.
3.17. Employee Benefit Plans. (a) Except for the arrangements set forth
-------- ------- -----
on Schedule 3.17(a), none of the Seller, Tran-Star or any of its Subsidiaries
-------- -------
now maintain or contribute to, and none of them have since December 31, 1993 and
to, the Seller's knowledge, during the three (3) years ended December 31, 1993,
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
Tran-Star or any of its Subsidiaries. Each of the arrangements set forth on
Schedule 3.17(a)
- -------- -------
<PAGE>
-12-
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 3.17(d)(iv), (vi) and (viii) and
3.17(g) below.
(b) The Seller has heretofore delivered to Buyer true, correct and
complete copies of each Employee Benefit Plan, and with respect to each 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 three (3) 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 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 Internal Revenue Code of 1986, as amended ("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 to Seller's knowledge nothing has occurred since the
date of the last such determination which has resulted or would result in the
revocation of such determination.
(d) Except as set forth on Schedule 3.17(d),
-------- -------
(i) there is no pending or to Seller's knowledge threatened legal
action, proceeding or investigation, other than routine claims for
benefits, concerning any Employee Benefit Plan or to the knowledge of the
Seller any fiduciary or service provider thereof and, to the knowledge of
the Seller, 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 Seller or Tran-Star 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
Seller or Tran-Star or any of its Subsidiaries, 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 Seller or
<PAGE>
-13-
Tran-Star or any of its Subsidiaries 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) neither of the Seller nor Tran-Star nor any of its
Subsidiaries has undertaken to maintain any Employee Benefit Plan for any
period of time and each such Employee Benefit 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
all amounts that the Seller or Tran-Star or any of its Subsidiaries is required,
under the terms of each such Employee Benefit Plan, to have paid as
contributions to that Employee Benefit Plan as of the 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 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 Tran-Star or any
of its Subsidiaries 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 3.17, "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 either of the
Seller or Tran-Star.
<PAGE>
-14-
3.18. Labor Relations. Except as set forth on Schedule 3.18, Tran-Star
----- --------- -------- ----
and its Subsidiaries are in compliance in all material respects 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. Except as set forth on
Schedule 3.18, there is no charge pending or to Seller's knowledge threatened
- -------- ----
against Tran-Star or any of its Subsidiaries 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 Tran-Star or any of
its Subsidiaries pending before the National Labor Relations Board. There is no
labor strike, dispute, slow-down or work stoppage actually pending or to
Seller's knowledge threatened against or involving Tran-Star or any of its
Subsidiaries. No one has petitioned since December 31, 1993, and no one is now
petitioning, for union representation of any employees of Tran-Star or any of
its Subsidiaries. No grievance or arbitration proceeding arising out of or
under any collective bargaining agreement is pending against Tran-Star or any of
its Subsidiaries and no claim therefor has been asserted in writing or to the
Seller's knowledge in some other form. None of the employees of Tran-Star or
any of its Subsidiaries is covered by any collective bargaining agreement, and
no collective bargaining agreement is currently being negotiated by Tran-Star or
any of its Subsidiaries. Except as fully described on Schedule 3.18 hereto,
-------- ----
neither Tran-Star nor any of its Subsidiaries has experienced any work stoppage
during the last five years.
3.19. Potential Conflicts of Interest. Except as set forth on Schedule
--------- --------- -- -------- --------
3.19, no officer, director or stockholder of the Seller, Services or Tran-Star
- ----
(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 of any Person
which is a competitor, lessor, lessee, customer or supplier of Tran-Star or any
of its Subsidiaries; (b) owns, directly or indirectly, in whole or in part, any
tangible or intangible property which Tran-Star or any of its Subsidiaries is
using or the use of which is necessary for the business of Tran-Star or any of
its Subsidiaries; or (c) has any cause of action or other claim whatsoever
against, or owes any amount to, Tran-Star or any of its Subsidiaries, 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.
3.20. Trademarks, Patents, Etc. Schedule 3.20 hereto sets forth a
---------- ------- --- -------- ----
complete and accurate list of (a) all patents, trademarks, trade names and
copyrights registered in the name of Tran-Star or any of its Subsidiaries or
used or proposed to be used by Tran-Star or any of its Subsidiaries, 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 Tran-Star or any of its Subsidiaries is
licensed or authorized by others to use or which Tran-Star or any of its
Subsidiaries has licensed or authorized for use by others. Except to the extent
set forth in Schedule 3.20, Tran-Star or one of its Subsidiaries 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
<PAGE>
-15-
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 reasonable basis for
such claim. To the knowledge of the Seller, the use by Tran-Star and its
Subsidiaries 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.
3.21. Suppliers and Customers. Schedule 3.21 hereto sets forth the ten
--------- --- --------- -------- ----
(10) largest suppliers and ten (10) largest customers of Tran-Star and its
Subsidiaries as of the date hereof. The relationships of Tran-Star and its
Subsidiaries with such suppliers and customers are good commercial working
relationships and, except as set forth on Schedule 3.21, no supplier or customer
-------- ----
of material importance to Tran-Star or any of its Subsidiaries has cancelled or
otherwise terminated, or to Seller's knowledge threatened to cancel or otherwise
to terminate, its relationship with Tran-Star or any of its Subsidiaries or has
during the last twelve (12) months decreased materially, or to Seller's
knowledge threatened to decrease or limit materially, its services, supplies or
materials for use by Tran-Star or any of its Subsidiaries or its usage or
purchase of the services or products of Tran-Star or any of its Subsidiaries
except for normal cyclical changes related to customers' businesses. The Seller
has no actual knowledge that any such supplier or customer intends to or has
threatened to cancel or otherwise substantially and adversely modify its
relationship with Tran-Star or any of its Subsidiaries or to decrease materially
or limit its services, supplies or materials to Tran-Star and its Subsidiaries,
or its usage or purchase of Tran-Star's or such Subsidiary's services or
products, and to the knowledge of the Seller, the communication of the
transactions contemplated hereby will not materially and adversely affect the
relationship of Tran-Star or any of its Subsidiaries with any such supplier or
customer.
3.22. Accounts Receivable. All accounts and notes receivable reflected on
-------- -----------
the Audited Balance Sheets, and all accounts and notes receivable arising
subsequent to the date of such Audited Balance Sheets, have arisen in the
ordinary course of business, represent valid obligations owing to Tran-Star or
one of its Subsidiaries and have been collected or are collectible in the
aggregate recorded amounts thereof in accordance with their terms, net of the
reserve for uncollected accounts included in the Specified Reserves (as defined
in Section 9.7).
3.23. No Undisclosed Liabilities. Except to the extent (a) reflected or
-- ----------- -----------
reserved against in the Audited Balance Sheets, (b) incurred in the ordinary
course of business after the date of the Audited Balance Sheets or (c) described
on any Schedule hereto, to Seller's knowledge neither Tran-Star nor any of its
Subsidiaries has any 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 contracts of Tran-Star or one of its Subsidiaries
that would not be
<PAGE>
-16-
required to be reflected or reserved against on a balance sheet prepared in
accordance with generally accepted accounting principles or in the footnotes
thereto.
3.24. Conduct of Business. Except to the extent disclosed on Schedule
------- -- -------- --------
3.24 or any other Schedule hereto, since December 31, 1996, Tran-Star and its
- ----
Subsidiaries have conducted their businesses in compliance with the provisions
of Article 5 hereof, as if each of those provisions applied to the conduct of
such businesses at all times since such date.
3.25. Taxes. Except as set forth on Schedule 3.25, Tran-Star and its
----- -------------
Subsidiaries have duly filed with the appropriate government agencies all of the
income, sales, use, employment and other tax returns and reports required to be
filed by it. No waiver of any statute of limitations relating to taxes has been
executed or given by Tran-Star or any of its Subsidiaries. Except as set forth
on Schedule 3.25, all taxes, assessments, fees and other governmental charges
-------------
upon Tran-Star or any of its Subsidiaries or upon any of their properties,
assets, revenues, income and franchises which are owed by Tran-Star or any of
its Subsidiaries with respect to the period ending on or before the Closing Date
have been paid, other than those currently payable without penalty or interest.
Tran-Star and its Subsidiaries have 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 Tran-
Star or any of its Subsidiaries is currently under audit by the IRS (as defined
in Article 11), and no other tax return of Tran-Star or any of its Subsidiaries
is currently under audit by any other taxing authority. Neither the IRS nor any
other taxing authority is now asserting or to Seller's knowledge threatening to
assert against Tran-Star or any of its Subsidiaries any deficiency or claim for
additional taxes or interest thereon or penalties in connection therewith or any
adjustment that would have a Material Adverse Effect.
3.26. Indebtedness. Except for Indebtedness described on Schedule 3.26
------------ -------------
hereto, neither Tran-Star nor any of its Subsidiaries has any Indebtedness
outstanding at the date hereof. Except as disclosed on Schedule 3.26 hereto,
-------- ----
neither Tran-Star nor any of its Subsidiaries is in default with respect to any
outstanding Indebtedness or any instrument relating thereto and no such
Indebtedness or any instrument or agreement relating thereto purports to limit
the issuance of any securities by Tran-Star or any of its Subsidiaries or the
operation of the business of Tran-Star or any of its Subsidiaries. Complete and
correct copies of all instruments (including all amendments, supplements,
waivers and consents) relating to any Indebtedness of Tran-Star or any of its
Subsidiaries have been furnished to the Buyer.
<PAGE>
-17-
3.27. Bank Accounts, Signing Authority, Powers of Attorney. Except as set
---- -------- ------- --------- ------ -- --------
forth on Schedule 3.27 hereto, neither Tran-Star nor any of its Subsidiaries has
-------- ----
any account or safe deposit box in any bank and no Person (as defined in Article
11) has any power, whether singly or jointly, to sign any checks on behalf of
Tran-Star or any of its Subsidiaries to withdraw any money or other property
from any bank, brokerage or other account of Tran-Star or to act under any power
of attorney granted by Tran-Star or any of its Subsidiaries at any time for any
purpose. Schedule 3.27 also sets forth the names of all persons authorized to
-------- ----
borrow money or sign notes on behalf of Tran-Star or any of its Subsidiaries.
3.28. Inventory. The inventory and supplies of Tran-Star and its
---------
Subsidiaries 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, if any, to be included in the Specified Reserves.
3.29. Minute Books. The minute books of Tran-Star and its Subsidiaries
------ -----
made available to the Buyer for inspection accurately record therein all actions
taken by the respective Boards of Directors and shareholders of Tran-Star and
its Subsidiaries.
3.30. Broker. Neither the Seller, Tran-Star or any of its Subsidiaries
------
nor Services has 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.
3.31. Disclosure. No representation or warranty by the Seller or Services
----------
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 Tran-Star and its Subsidiaries. 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 reasonably foresee
will materially adversely affect, the business or condition (financial or other)
of Tran-Star and its Subsidiaries taken as a whole or the ability of the Seller
or Services to perform this Agreement or any of the transactions contemplated
hereby.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to the Seller and Services as follows:
4.1. 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 the other Transaction Agreements to which it is to be
a party and to carry out all of the actions required of it pursuant to the terms
hereof and thereof.
<PAGE>
-18-
4.2. 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 Transaction Agreements to which it is to be a party and the consummation
of the transactions contemplated hereby and thereby. This Agreement has been
duly executed and delivered by the Buyer and constitutes, and each of the other
Transaction Agreements to which it is to be a party at the Closing will be duly
executed and delivered by the Buyer and will constitute, the legal, valid and
binding obligation of the Buyer, enforceable against the Buyer in accordance
with its 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.
4.3. Non-Contravention. The execution and delivery by the Buyer of this
-----------------
Agreement and the other Transaction Agreements to which it is to be a party 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, except in the case of (i) or (ii) for
any violations, conflicts, defaults or liens that individually and in the
aggregate will not have a material adverse effect on the Buyer's ability to
perform its obligations under this Agreement and the other Transaction Documents
to which it is a party.
4.4. Governmental Consents. Except for filings required under the Hart-
------------ --------
Scott-Rodino Antitrust Improvement Act of 1976, as amended (the "H-S-R Act"), 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 Transaction Agreements to
which it is to be a party or for the consummation by the Buyer of the
transactions contemplated hereby or thereby.
4.5. 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.
4.6. Securities Laws. The Buyer acknowledges that the sale of the Stock
---------- ----
pursuant to this Agreement has not been registered under the Securities Act of
1933, as amended, or any state securities laws, and the Buyer is purchasing the
Stock for investment for its account, not as nominee or agent, and not with a
view to the sale or distribution of any part thereof.
4.7. Operation of Tran-Star. The Buyer shall cause Tran-Star to perform
--------- -- ---------
after the Closing all of its obligations that are to be performed after the
Closing under the terms and
<PAGE>
-19-
conditions of the Separation and Services Agreement, dated January 1, 1997,
among the Seller, Tran-Star and ProShell (the "Separation Agreement").
---------- ---------
5. CONDUCT OF BUSINESS BY TRANSTAR PENDING CLOSING. The Seller covenants
and agrees 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:
5.1. Full Access. The Seller shall cause Tran-Star and its Subsidiaries
---- ------
to afford to the Buyer and its authorized representatives full access during
normal business hours to all properties, books, records, contracts and documents
of Tran-Star and its Subsidiaries and a full opportunity to make such reasonable
investigations as they shall desire to make of Tran-Star and its Subsidiaries
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 Tran-Star and its Subsidiaries as the Buyer may reasonably
request.
5.2. Carry on in Regular Course. The Seller shall cause Tran-Star and its
----- -- -- ------- ------
Subsidiaries 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.
5.3. No General Increases. Except for annual merit increases to non-
-- ------- ---------
officer employees made consistent with past practice, the Seller shall not
permit Tran-Star or any of its Subsidiaries to grant any general or uniform
increase in the rates of pay of employees of Tran-Star and its Subsidiaries, 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
neither Tran-Star nor any of its Subsidiaries shall increase the compensation
payable or to become payable to officers, 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, salaried employees or
agents.
5.4. No Dividends, Issuances, Repurchases, etc. The Seller shall not
-- --------- --------- ------------ ---
permit Tran-Star or its Subsidiaries 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. The Seller shall not permit
Tran-Star or any of its Subsidiaries to pay any interest or principal on any
Indebtedness owed, or any other amounts other than salaries consistent with
Sections 3.16 and 5.4, to the Seller or Services or the Seller's stockholders or
any officer or director of Tran-Star, the Seller or Services, or any of their
family members.
5.5. Contracts and Commitments. The Seller shall not permit Tran-Star or
--------- --- -----------
its Subsidiaries 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 Tran-Star and its Subsidiaries.
<PAGE>
-20-
5.6. Purchase and Sale of Capital Assets. The Seller shall not permit
-------- --- ---- -- ------- ------
Tran-Star or any of its Subsidiaries to purchase or sell or otherwise dispose of
any capital asset (other than rolling stock) with a market value in excess of
$5,000, or of capital assets of market value aggregating in excess of $50,000,
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. The Seller shall not permit Tran-Star or any of its Subsidiaries
to purchase or sell any trucks or trailers without the Buyer's prior written
consent.
5.7. Insurance. The Seller shall cause Tran-Star and its Subsidiaries to
---------
maintain the insurance described on Schedule 3.14, covering such risks and in
-------- ----
such amounts and with such deductibles and exclusions as are consistent with
prudent business practice.
5.8. Preservation of Organization. The Seller shall cause Tran-Star and
------------ -- ------------
its Subsidiaries to use their reasonable best efforts to preserve their business
organizations intact, to keep available to the Buyer the present key officers
and employees of Tran-Star and its Subsidiaries and to preserve for the Buyer
the present relationships of the suppliers and customers of Tran-Star and its
Subsidiaries and others having business relations with Tran-Star or any of its
Subsidiaries.
5.9. No Default. The Seller shall not permit Tran-Star or any of its
-- -------
Subsidiaries 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 Tran-Star or any of its Subsidiaries.
5.10. Compliance with Laws. The Seller shall cause Tran-Star and its
---------- ---- ----
Subsidiaries to comply with all laws, regulations and orders applicable with
respect to their business.
5.11. 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 Tran-Star and its Subsidiaries taken as a whole.
5.12. No Shopping. The Seller shall not, and shall not permit Tran-Star
-- --------
or any of its Subsidiaries to, negotiate for, solicit or enter into any
agreement with respect to the sale of the Stock or any substantial portion of
the assets of Tran-Star or any of its Subsidiaries or any merger or other
business combination of Tran-Star or any of its Subsidiaries, to or with any
Person other than the Buyer.
5.13. Consents of Third Parties. The Seller will employ its reasonable
-------- -- ----- -------
best efforts to secure, before the Closing Date, the consent, in form and
substance reasonably satisfactory to the Buyer and the Buyer's counsel, to the
consummation of the transactions contemplated by this Agreement by each party to
any material contract, commitment or obligation of Tran-Star or any of its
Subsidiaries, under which such transactions would constitute a default, would
accelerate obligations of Tran-Star or any of its Subsidiaries or would permit
cancellation of any such contract.
<PAGE>
-21-
5.14. Satisfaction of Conditions Precedent. The Seller will use its
------------ -- ---------- ---------
reasonable best efforts to cause the satisfaction of the conditions precedent
contained herein.
6. 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):
6.1. Representations and Warranties True at Closing. The representations
--------------- --- ---------- ---- -- -------
and warranties made by the Seller and Services 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.
6.2. Compliance with Agreement. The Seller and Services shall have
---------- ---- ---------
performed and complied with all of their obligations under this Agreement to be
performed or complied with by them on or prior to the Closing Date.
6.3. 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 Tran-Star and its Subsidiaries (whether or not covered by
insurance) or any material adverse change in the condition (financial or
otherwise), operations, business, prospects or assets of Tran-Star and its
Subsidiaries taken as a whole or imposition of any laws, rules or regulations
which would materially adversely affect the condition (financial or otherwise),
operations, business, prospects or assets of Tran-Star and its Subsidiaries
taken as a whole.
6.4. Seller's Certificate. The Seller and Services shall have delivered
-------- -----------
to the Buyer in writing, at and as of the Closing, a certificate duly executed
by the Seller and Services, in form and substance satisfactory to the Buyer and
the Buyer's counsel, certifying that the conditions in each of Sections 6.1, 6.2
and 6.3 have been satisfied.
6.5. Opinion of Counsel. Frank & Frank, counsel to the Seller, Tran-Star
------- -- -------
and Services, shall have delivered to the Buyer a written opinion, addressed to
the Buyer and dated the Closing Date, substantially in the form of Exhibit C
---------
hereto.
6.6. Required Approvals. All regulatory and other approvals in connection
-------- ---------
with the transactions contemplated by this Agreement shall have been obtained in
form and substance reasonably satisfactory to the Buyer and its counsel.
Without limiting the generality of the foregoing, the Seller and the Buyer shall
have made the filings required under the H-S-R Act, and the waiting period under
the H-S-R Act shall have expired or shall have been waived without the
imposition of any conditions or restrictions that would materially and adversely
impact the economic or business benefits to the Buyer of the transactions
contemplated by this Agreement.
<PAGE>
-22-
6.7. 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 to the Seller's knowledge threatened before any court or
administrative body 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.
6.8. Non-Competition Agreements. The Seller, Services and ProShell shall
--------------- ----------
have executed and delivered to the Buyer the applicable Non-Competition
Agreements.
6.9. Employment Agreements. The Managers shall have executed and
---------------------
delivered to the Buyer the Employment Agreements.
6.10. Resignations of Directors and Officers. Except as set forth on
------------ -- --------- --- --------
Schedule 6.10 hereto, all of the directors and officers of Tran-Star and its
- -------- ----
Subsidiaries shall have resigned their positions with Tran-Star and its
Subsidiaries, 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.
6.11. Environmental Report. The Buyer shall have obtained a report, in
------------- ------
form and substance satisfactory to it, of an environmental engineering firm
satisfactory to the Buyer, as to compliance of the Real Property with all
applicable environmental statutes, rules and regulations, including without
limitation the absence of any oil or Hazardous Substances on or near such Real
Property.
6.12. Title Insurance. The Buyer shall have received on the Closing Date
----- ---------
a title insurance policy or title commitment with respect to the Real Property
located in Etters, Pennsylvania and Waupaca, Wisconsin, issued by a title
insurer reasonably acceptable to, and in form reasonably acceptable to, the
Buyer naming Tran-Star as the insured.
6.13. Indebtedness. The Seller shall have delivered to the Buyer a
------------
certificate certifying as to the amount of Indebtedness of Tran-Star and its
Subsidiaries outstanding on the Closing Date, and specifying the amount owed to
each creditor. The aggregate amount of such Indebtedness shall not exceed
$36,123,000. The Seller shall have caused creditors of Tran-Star or any of its
Subsidiaries to deliver pay-off letters and lien discharges, each in form
satisfactory to the Buyer, with respect to such Indebtedness.
6.14. Financing. The Buyer shall have obtained debt and equity financing
---------
on terms reasonably satisfactory to it, providing the Buyer with sufficient
funds to pay the Purchase Price and all fees and expenses of the Buyer arising
in connection with the transactions contemplated by this Agreement and providing
the Buyer with sufficient availability to finance its working capital needs
following the Closing, and all conditions precedent to funding under such
financing arrangements (other than the purchase and sale contemplated hereby)
shall have been satisfied or waived.
<PAGE>
-23-
6.15. Due Diligence. The Buyer shall have completed its due diligence
--- ---------
investigation concerning the Stock, all aspects of the business of Tran-Star and
its Subsidiaries and their respective assets and liabilities (including
environmental liabilities), and the Buyer shall have concluded in its sole
discretion that it is satisfied with its findings.
6.16. Schedules. The Seller shall have prepared and delivered to the
---------
Buyer the Schedules referred to in this Agreement, and the Buyer shall have
concluded in its sole discretion that it is satisfied with the form and content
of such Schedules.
6.17. Specified Reserves. Pursuant to Section 9.7, the Seller shall have
--------- --------
prepared, and the Buyer shall have reviewed, the Specified Reserves, and the
Buyer shall have concluded in its sole discretion that it is satisfied with the
scope and amount of the Specified Reserves.
6.18. Consents of Third Parties. The Seller will have obtained the
-------- -- ----- -------
consent, in form and substance reasonably 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 Tran-
Star or any of its Subsidiaries under which such transactions would constitute a
default, would accelerate obligations of Tran-Star or any of its Subsidiaries or
the Buyer or would permit cancellation of any such contract.
6.19. 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.
7. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATIONS. The obligation of
the Seller 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 Seller):
7.1. 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.
7.2. 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.
7.3. 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
<PAGE>
-24-
the Buyer, in form and substance satisfactory to the Seller and the Seller's
counsel, to the effect that the conditions in each of Sections 7.1 and 7.2 have
been satisfied.
7.4. H-S-R. The Seller and the Buyer shall have made the fillings
-----
required under the H-S-R Act, and the waiting period under the H-S-R Act shall
have expired or waived without the imposition of any conditions or restrictions
that would materially and adversely impact the economic or business benefits to
the Seller of the transactions contemplated by this Agreement.
7.5. Opinion of Counsel. 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, substantially in the form of Exhibit D, hereto.
---------
7.6. Required Approvals. All regulatory and other approvals in connection
-------- ---------
with the transactions contemplated by this Agreement shall have been obtained in
form and substance reasonably satisfactory to the Seller and its counsel.
7.7. 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 to the Buyer's knowledge threatened before any court or
administrative body 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.
7.8. Proceedings and Documents Satisfactory. All proceedings in
----------- --- --------- ------------
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to the Seller in connection with the
transactions contemplated by this Agreement shall be satisfactory in all
reasonable respects to the Seller and its counsel, and the Seller shall have
received the originals or certified or other copies of all such records and
documents as the Seller may reasonably request.
8. CONFIDENTIAL INFORMATION. Any and all information disclosed by the
Buyer to the Seller or Services or by the Seller or Services to the Buyer as a
result of the discussions and negotiations leading to the execution of this
Agreement, or in furtherance thereof, which information was not already public
information or was not already known to the Seller or Services or to the Buyer,
as the case may be, shall remain confidential to each of the Seller and Services
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 and Services and
the Buyer agree 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 the
Seller or Services, respectively.
<PAGE>
-25-
9. INDEMNIFICATION.
9.1. Indemnity by Seller and Services. Subject to the provisions set forth
--------- -- ------ --- --------
in Sections 9.3 - 9.9, each of the Seller and Services jointly and severally
agrees to indemnify and hold the Buyer and Tran-Star and its Subsidiaries (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 reasonable fees and disbursements of
counsel (collectively, "Losses"), related to or arising, directly or indirectly,
------
out of:
(i) any failure or any breach by the Seller or Services of any
representation or warranty made by the Seller or Services in this
Agreement, any Schedule or Exhibit hereto, or any other statement,
certificate or other instrument delivered pursuant hereto;
(ii) any failure or any breach by Seller or Services of any covenant,
obligation or undertaking made by the Seller or Services in this Agreement
or any Exhibit hereto;
(iii) any actual or alleged liability for death or injury to person
or property as a result of any services provided by Tran-Star or any of its
Subsidiaries on or prior to the Closing Date;
(iv) any actual or alleged liability (including without limitation any
liability or alleged liability for cleanup, removal, remediation or other
response costs or for death or injury to Person or property) arising from
(x) the violation by the Seller, Tran-Star or any of its Subsidiaries or
Services of any Environmental Law at any time on or prior to the Closing
Date, (y) the release, emission, discharge 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 any real property (including
the Real Property) presently or formerly owned, leased or operated by the
Seller, Tran-Star or any of its Subsidiaries or Services or any
predecessors in interest or (z) the transportation at any time on or prior
to the Closing Date by the Seller, Tran-Star or any of its Subsidiaries or
Services or their subcontractors of any Hazardous Substance, toxic
pollutant or other chemical by-product;
(v) any liability of Tran-Star or any of its Subsidiaries with respect
to any of the items disclosed on Schedules 3.10, 3.11, 3.13, 3.17 (d) or
--------- ---- ---- ---- ---- -
3.18 hereto; or
----
(vi) any liability of ProShell of any nature.
9.2. Indemnity by the Buyer. Subject to the provisions set forth in
--------- -- --- -----
Sections 9.3 - 9.9, the Buyer agrees to indemnify and hold the Seller and
Services (and their directors, officers, employees and affiliates) harmless from
and with respect to any and all Losses related to or arising, directly or
indirectly, out of:
<PAGE>
-26-
(i) any failure or any breach by the Buyer of any representation or
warranty made by the Buyer in this Agreement, any Schedule or Exhibit
hereto, or any other statement, certificate or other instrument delivered
pursuant hereto;
(ii) without in any way limiting the obligations of the Seller and
Services under Section 9.1, any failure or any breach by the Buyer of any
covenant, obligation or undertaking made by the Buyer in this Agreement or
any Exhibit hereto or any failure or any breach by Tran-Star of any
covenant, obligation or undertaking made by it in the Lease Agreement; or
(iii) without in any way limiting the obligations of the Seller and
Services under Section 9.1, any liability of Tran-Star and its Subsidiaries
arising after the Closing Date and relating to the operation by Tran-Star
and its Subsidiaries of their businesses after the Closing Date, including
any failure by Tran-Star to perform after the Closing any of its
obligations that are to be performed after the Closing under the Separation
Agreement.
9.3. Materiality Standards. For purposes of determining those Losses
----------- ---------
arising from breaches of representations, warranties or covenants that will be
considered immaterial in nature and accordingly not subject to indemnification
hereunder, the Buyer and the Seller and Services have agreed to use predictable
dollar thresholds as provided in this Section 9.3. Accordingly, the Buyer and
the Seller and Services agree that with respect to any representation, warranty
or covenant referred to in Section 9.1(i) or (ii) or 9.2(i) or (ii), if such
representation, warranty or covenant contains a materiality qualification (e.g.,
----
"Material Adverse Effect" "material," "materially," "material to Tran-Star," "in
all material respects," or similar qualifiers), such materiality qualification
shall be deemed to have been met, and such representation, warranty or covenant
shall be deemed to have been breached, if the Buyer or the Seller and Services
or their affiliated parties entitled to indemnification pursuant to Section 9.1
or Section 9.2 ("Indemnified Buyer Parties" and "Indemnified Seller Parties",
----------- ----- ------- ----------- ------ -------
respectively), as applicable, incurs or is alleged to have incurred Losses in
excess of $2,500 in connection with the matter or event to which such
representation, warranty or covenant relates.
9.4 Time Limitation. Neither the Seller and Services nor the Buyer shall
---- ----------
be liable to the other for any claim for indemnification under Section 9.1 or
Section 9.2 unless the claim is asserted in writing by the party seeking
indemnification hereunder no later than the second anniversary of the Closing
Date, provided that any claim for indemnification under (A) Section 9.1(i)
-------- ----
arising from a breach of a representation or warranty in Sections 3.2, 3.4, 3.5,
3.13 or 3.30, (B) under Section 9.2(i) arising from a breach of a representation
or warranty in Sections 4.2 or 4.5, (C) under Section 9.1(ii) insofar as it
relates to a breach by the Seller of its covenants in Sections 1.1, 5.4 or 5.12,
(D) under Section 9.1(iv), (E) under Section 9.2(ii) insofar as it relates to a
breach by the Buyer of its obligations under Section 1.1 (with the claims set
forth in (A) - (E) referred to as "Unlimited Claims") or (F)
--------- ------
<PAGE>
-27-
under the Tax Agreement may be made at any time in the future, subject to any
applicable statute of limitation.
9.5. Limitations on Indemnification.
----------- -- ---------------
(a) Neither the Seller and Services nor the Buyer shall be required to
indemnify the Indemnified Buyer Parties or Indemnified Seller Parties, as
applicable, except to the extent that the aggregate amount of Losses for which
the applicable parties are otherwise entitled to indemnification pursuant to
this Article 9 exceeds $50,000, whereupon the Indemnified Buyer Parties or
Indemnified Seller Parties shall be entitled to be paid the excess of the
aggregate amount of all such Losses over $50,000, subject to the limitations on
maximum amount of recovery set forth in Section 9.5(b); provided, that Losses
--------
related to or arising directly or indirectly out of Unlimited Claims shall be
indemnified in their entirety by the applicable indemnifying party and shall not
be subject to the limitations set forth in this Section 9.5(a).
(b) The aggregate Losses payable by the Seller and Services pursuant
to this Article 9 with respect to all claims for indemnification, other than
with respect to Unlimited Claims, shall not exceed the sum of $750,000 plus any
amounts retained by Tran-Star pursuant to Section 8.2.4 of the Lease Agreement.
The aggregate Losses payable by the Buyer pursuant to this Article 9 with
respect to all claims for indemnification, other than with respect to Unlimited
Claims, shall not exceed the total amount referred to in the preceding sentence.
Unlimited Claims shall not be subject to any aggregate liability.
(c) Any Losses payable by any party pursuant to this Article 9 shall
include only actual damages suffered by the Indemnifying Party. In no event
shall any party be liable for any incidental or consequential damages.
(d) Notwithstanding any provision of this Agreement to the contrary,
if the Seller or Services is required to indemnify the Buyer for Losses suffered
as a result of a breach of any representation or warranty set forth in Section
3.12(c) then such Losses shall be calculated according to and shall not exceed
the book value ascribed to such asset adversely affected by such breach, as
shown on the Company's balance sheet as of the Closing Date, determined in
accordance with past practice.
9.6. Net Recovery. Any losses otherwise payable by the Seller and Services
--- --------
shall be reduced by (i) any related insurance recovery actually received by the
Buyer or Tran-Star with respect to the matter giving rise to the claims for
indemnification, (ii) any refunds of Taxes actually received by Tran-Star after
the Closing and relating to pre-Closing periods, to the extent not previously
used to offset Losses pursuant to this Section 9.6 and (iii) any amounts
otherwise received from third parties with respect to the Losses giving rise to
the claim for indemnification. For this purpose, all costs incurred subsequent
to Closing by the Buyer or Tran-Star with respect to any such items otherwise
indemnified by Seller or Services, including reasonable attorneys fees and court
costs incurred in obtaining such insurance proceeds, other recovery, or
settlements, shall be netted against such refund,
<PAGE>
-28-
proceeds, recovery or settlement. Any claim for indemnification against the
Buyer shall be reduced by (i) any related insurance recovery actually received
by the Seller or Services with respect to the matter giving rise to the claim
for indemnification and (ii) any amounts otherwise received by third parties
with respect to the Losses giving rise to the claim for indemnification. For
this purpose, all costs incurred subsequent to Closing by the Seller or Services
with respect to any such items otherwise indemnified by Buyer, including
reasonable attorneys fees and court costs incurred in obtaining such insurance
proceeds, other recovery, or settlements, shall be netted against such refund,
proceeds, recovery or settlement.
9.7. Unused Reserves.
------ --------
(a) Prior to the Closing the Seller will prepare a detailed schedule
of reserves set forth on Tran-Star's books and records as of the most recent
practicable date prior to the Closing. These reserves will be determined based
on generally accepted accounting principles applied on a consistent basis. The
Seller and the Buyer will meet prior to the Closing to review and discuss this
schedule as required to comply with the preceding sentence. The reserves on
this schedule, as so adjusted, are referred to in this Agreement as the
"Specified Reserves".
- ---------- --------
(b) The Seller and Services shall not be required to pay a pending
indemnification claim under Section 9.1 so long as the aggregate amount of
unpaid indemnification claims otherwise payable pursuant to Section 9.1
("Pending Claims") is less than the amount at such time of the Unused Reserves.
- --------- ------
If the amount of Pending Claims never exceeds the Unused Reserves, such Pending
Claims shall never become payable. Whenever the Pending Claims exceed the
Unused Reserves, such excess amount shall become payable as provided in this
Article 9. As used in this Agreement, "Unused Reserves" at any time means the
------ --------
aggregate amount of Specified Reserves as reduced to such time to reflect the
cumulative resolution of claims, contingencies or other matters that were the
subject of such Specified Reserves (whether specifically or generally, such as
claims of the type for which an "Incurred But Not Reported Claims" reserve is
maintained).
9.8. 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 the Indemnified Party to give such notice
--------
shall not relieve the Indemnifying Party of its obligations under this Article 9
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"), the Indemnifying Party shall be entitled to participate
----- ----- -----
in the defense of such
<PAGE>
-29-
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.
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.
9.9. Method and Manner of Paying Claims. In the event of any claims under
------ --- ------ -- ------ ------
this Article 9, 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
(30) days the other party has not contested such claim in writing, the other
party will pay the full amount thereof within ten (10) 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 Indemnified Party against any amounts owed by
the Indemnified Party to any Indemnifying Party.
10. TERMINATION. This Agreement may be terminated by either the Buyer or
the Seller and Services in writing, without liability to the terminating party
on account of such termination (provided the terminating party is not otherwise
in default or in breach of this Agreement), if the Closing shall not have
occurred on or before May 15, 1997, other than as a consequence of the
intentional breach or the intentional default by the terminating party.
11. DEFINITIONS. As used herein the following terms not otherwise
defined have the following respective meanings:
"Affiliate": with respect to any Person means any Person controlling,
---------
controlled by or under common control with such Person.
"GAAP": generally accepted accounting principles which are (a) consistent
----
with the principles promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, in effect for the fiscal year ended December 31,
1996, (b) applied on a basis
<PAGE>
-30-
consistent with prior periods, and (c) such that a 'big six" accounting firm
would, insofar as the use of accounting principles is pertinent, be in a
position to deliver an unqualified opinion as to financial statements in which
such principles have been properly applied.
"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 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.
---
"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.
"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-
12. GENERAL.
12.1 Survival of Representations and Warranties. The representations and
-------- -- --------------- --- ----------
warranties of the Buyer and Seller and Services 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
the Buyer, shall be deemed to have been relied on by the Buyer and shall survive
the Closing, and the consummation of the transactions contemplated hereby. Each
representation and warranty made by the Seller and Services 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 9.4 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 Article 9.
12.2. Consent to Jurisdiction.
------- -- ------------
(a) Each of the parties hereby irrevocably submits to the jurisdiction
of any state or federal court sitting in Fort Worth, Texas over any action or
proceeding arising out of or relating to this Agreement and irrevocably agrees
that all claims in respect to such action or proceeding may be heard and
determined in such state or federal court. Any service of process may be made
pursuant to the notice provisions of Section 12.4.
(b) Nothing in this Section 12.2 shall affect the right of the Buyer
to serve legal process in any other manner permitted by law or affect the right
of the Buyer to bring any action or proceeding against the Seller or Services or
their respective properties in the courts of any other jurisdictions.
12.3. Expenses. The Seller shall pay all transfer and sales taxes payable
--------
in connection with the sale of the Stock. 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.
12.4. 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 or Services, to:
c/o Robert Goldberg
455 Industrial Drive
Waupaca, WI 54981
<PAGE>
-32-
with a copy sent contemporaneously to:
Daniel C. Paulus, Esq.
Frank & Frank
1102 Seventeenth Avenue South, Suite 300
Nashville, Tennessee 37212
If to the Buyer, to:
J. Michael May
AmeriTruck Distribution Corp.
301 Commerce Street, Suite 1101
Fort Worth, Texas 76102
with a copy sent contemporaneously to:
John R. Utzschneider, Esq.
Bingham, Dana & Gould
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, upon confirmation of receipt.
12.5. 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. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, EACH OF THE SELLER AND SERVICES AND THE BUYER
ACKNOWLEDGES THAT NO PARTY HERETO IS MAKING ANY REPRESENTATION OR WARRANTY
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT EXCEPT AS EXPRESSLY SET FORTH
IN THIS AGREEMENT OR ONE OF THE OTHER TRANSACTION AGREEMENTS.
12.6. 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 Delaware.
12.7. Sections and Section Headings. The headings of sections and
-------- --- ------- --------
subsections are for reference only and shall not limit or control the meaning
thereof.
<PAGE>
-33-
12.8. 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 12.8 shall prevent the Buyer, without the consent of
the Seller or Services, (a) from transferring or assigning this Agreement or its
rights or obligations hereunder to another entity controlling, under 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. The Buyer will
provide the Seller with notice of any such assignment.
12.9. 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.
12.10. 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.
12.11. 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 and Services and the Buyer, any rights or remedies under or by reason
of this Agreement.
12.12. 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.
12.13. Satisfaction of Conditions Precedent. Each of the Seller and
------------ -- ---------- ---------
Services and the Buyer will use its reasonable best efforts to cause the
satisfaction of the conditions precedent contained in this Agreement; provided,
--------
however, that nothing contained in this Section 12.13 shall obligate either
- -------
party hereto to waive any right or condition under this Agreement.
12.14. 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 written consent of the other
party hereto, with any such consent not to be unreasonably withheld or delayed.
Nothing contained in this Section 12.14 shall prevent either party from making
such disclosures as such party may consider reasonably necessary to satisfy such
party's legal or contractual obligations.
<PAGE>
-34-
12.15. Construction. The language used in this Agreement will be deemed
------------
to be the language chosen by the parties to express their mutual intent and no
rule of strict construction will be applied against either party.
12.16. Disclosure in Schedules. For purposes of this Agreement, with
---------- -- ---------
respect to any matter that is disclosed in any Schedule in such a way as to make
its relevance to the information called for by another Section of this Agreement
reasonably apparent, such matter shall be deemed to have been included in the
applicable Schedule in response to such other Section, notwithstanding the
omission of any appropriate cross-reference thereto.
<PAGE>
-35-
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.
By: /s/ KENNETH H. EVANS JR.
--------------------------
Title: Chief Financial and
Administrative Officer
ALLWAYS SERVICES, INC.
By: /s/ BOB GOLDBERG
---------------------------
Title: President
TRANSTAR SERVICES, INC.
By: /s/ BOB GOLDBERG
--------------------------
Title: President
<PAGE>
Draft of 05/13/97
-----------------
Exhibit A to
Stock Purchase Agreement
------------------------
LEASE
by and between
TRANSTAR SERVICES, INC.
("Landlord")
and
TRAN-STAR, INC.
("Tenant")
May __, 1997
Premises at 597 Salem Road, Etters, Pennsylvania
<PAGE>
Draft of 05/13/97
-----------------
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: Transtar Services, Inc., a Delaware corporation.
--------
Original Address of Landlord: c/o Robert Goldberg, Transtar Services,
----------------------------
Inc., 455 Industrial Drive, Waupaca, WI 54981
Tenant: Tran-Star, Inc.
------
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: Twelve (12) months.
----------
Annual Fixed Rental Rate: $40,000
------------------------
Public Liability Insurance Limits (per occurrence):
---------------------------------
Bodily Injury: $5,000,000, or greater amount as reasonably required
by Landlord from time to time.
Property Damage: $5,000,000, 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 twelfth 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, insure 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.
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, installations,
-------------
alterations or additions 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
<PAGE>
-3-
thereon free from any liens arising out of any work performed, material
furnished, or obligations incurred by or on behalf of Tenant.
ARTICLE IV
Rent
----
4.1 The Fixed Rent. The Fixed Rent shall be $60,000 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 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 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,
<PAGE>
-4-
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 and in the case of (a) and
(c) below shall name the Landlord as an additional named insured and as loss
payee:
(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.
(c) A standard "all risk" fire and extended coverages policy covering the
Premises in a minimum amount equal to the replacement cost of 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 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 Commonwealth of Pennsylvania (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.
<PAGE>
-5-
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.
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
<PAGE>
-6-
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
Environmental Laws (as defined in the Stock Purchase Agreement referred to in
Section 8.2.4), 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 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 (collectively,
the "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
<PAGE>
-7-
prohibit the installation of customary vending machines) all or any part of the
Premises. Notwithstanding the foregoing, Tenant may assign this Lease to any
affiliated corporation without the Landlord's prior consent, but no such
assignment shall relieve the Tenant of its obligations under the Lease.
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.
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. Any amounts paid with respect to a Taking or Casualty shall be
-----
held by the Landlord in a bank escrow account pursuant to an escrow agreement
satisfactory to the Landlord and Tenant. At the time the Tenant purchases the
Premises pursuant to Section 8.2, the escrowed funds will be transferred to the
Tenant. In the event the Tenant and the Landlord elect to terminate this Lease,
or if Landlord terminates this Lease (including Tenant's purchase obligations
under Article 8) as a result of Tenant's default prior to such Taking or
Casualty, such funds shall be retained by the Landlord.
<PAGE>
-8-
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 Pennsylvania 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 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.
<PAGE>
-9-
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 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 two percent (2%) 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.
<PAGE>
-10-
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:
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 [insert description of title commitment
--------------------------------------
referred to in Section 6.12 of the Stock Purchase Agreement] 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
-------- -----
Five Hundred Thousand Dollars ($500,000) as adjusted pursuant to Section 8.2.4
hereof, plus any unpaid Fixed Rent or Additional Rent. 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 March 31, 1997 (the "Stock Purchase Agreement"), among AmeriTruck
------------------------
Distribution Corp., a Delaware corporation ("AmeriTruck"), Landlord and Allways
----------
Services, Inc., a Tennessee corporation, Tenant shall be entitled to reduce the
Purchase Price by the total amount of pending claims for indemnification by
AmeriTruck or Tenant pursuant to Article 9 of the Stock Purchase Agreement or
pursuant to the Tax Indemnification Agreement entered into pursuant to the Stock
<PAGE>
-11-
Purchase Agreement (collectively, "Indemnity Claims"). In the event that the
----------------
Tenant reduces the Purchase Price payable for the Premises to reflect Indemnity
Claims in the nature of costs to be incurred in the future, 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.
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 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. Except as expressly provided in this
-------------
Agreement, at Closing of Tenant's purchase of the Premises, Landlord and Tenant
shall each pay closing costs in accordance with customary practice for
conveyancing
<PAGE>
-12-
in the county in Pennsylvania in which the Premises are located.
The Buyer will bear the expense of the title policy referred to in Section
8.2.2.
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
business 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 as required hereunder, 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 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. Any such
signs shall be subject to Landlord's consent, not to be unreasonably withheld.
In the event this
<PAGE>
-13-
Lease is terminated other than through the purchase and sale provided for in
Section 8.2, the Tenant shall remove such signs.
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 Commonwealth of Pennsylvania. 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 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
<PAGE>
-14-
Stock Purchase Agreement shall prevail. The provisions of this Lease are not
intended to modify or waive any of the Landlord's or Allways Services, Inc.'s
obligations under the Stock Purchase Agreement. Without limiting the generality
of the foregoing, any claims under Section 9.1 will be subject to the Landlord's
and Allways Services, Inc.'s indemnification obligations provided for in Article
9 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 Article 9 of the Stock Purchase Agreement.
9.10 Time of Essence. Time is of essence of this Lease.
---------------
<PAGE>
-15-
WITNESS the execution hereof under seal as of the day and year first above
written.
Tenant:
TRAN-STAR, INC.
By:
-------------------------
Name:
Title:
Landlord:
TRANSTAR SERVICES, INC.
By:
--------------------------
Name:
Title:
<PAGE>
Draft of 05/13/97
Exhibit B-1 to
Stock Purchase Agreement
------------------------
NON-COMPETITION AGREEMENT
-------------------------
This NON-COMPETITION AGREEMENT (this "Agreement"), made as of this ____ day
---------
of ____________, 1997 by and between Allways Services, Inc., a Delaware
corporation (the "Stockholder"), and AmeriTruck Distribution Corp., a Delaware
-----------
corporation (the "Company").
-------
WHEREAS, the Company, the Stockholder, and Transtar Services Inc., a
Delaware corporation ("Services"), are parties to a Stock Purchase Agreement,
--------
dated as of March 31, 1997 (the "Stock Purchase Agreement"), pursuant to which
----- -------- ---------
the Company will purchase from the Stockholder all of the outstanding capital
stock (the "Stock") of Tran-Star, Inc., a Wisconsin corporation ("Tran-Star");
----- ---------
WHEREAS, the Stockholder is the sole stockholder of Tran-Star; and
WHEREAS, the Company seeks to protect its investment in the business and
goodwill of Tran-Star, and is not willing to purchase the Stock unless the
Stockholder agrees to be bound by the non-competition provisions contained in
this Agreement.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
(S)1. Non-Competition. The Stockholder acknowledges that the covenants
---------------
and agreements in this (S)1 are a condition precedent to the Company's
obligation to purchase the Stock from the Stockholder under the Stock Purchase
Agreement, and that the Company would not purchase and pay for the Stock but for
the Stockholder's agreements herein. The Stockholder and the Company
acknowledge that Tran-Star will provide services to customers located in markets
throughout the United States and that engagement by the Stockholder in the
Designated Industry (as hereinafter defined) anywhere in the United States could
cause Tran-Star and the Company irreparable damage. The Stockholder will not
(a) engage in the Designated Industry anywhere in the United States, directly or
indirectly, alone or as a shareholder, partner or consultant of any other
business organization, (b) divert to any competitor of the Company or Tran-Star
in the Designated Industry any customer of the Company or Tran-Star, or (c)
solicit or encourage any officer, employee or consultant of the Company or Tran-
Star to leave its employ for employment by or with the Stockholder or any
competitor of the Company or Tran-Star. The foregoing restriction shall not
prevent the Stockholder from owning five percent (5%) or less of the equity
securities of any publicly traded company.
<PAGE>
-2-
For purposes of this (S)1, the term "Designated Industry" shall mean the
---------- --------
business of providing transportation for commodities or goods requiring
temperature control or providing brokerage or logistics services concerning
commodities or goods requiring temperature control. If at any time the
provisions of this (S)1 shall be determined to be invalid or unenforceable, by
reason of being vague or unreasonable as to area, duration or scope of activity,
this (S)1 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 Stockholder agrees that this (S)1 as so amended shall
be valid and binding as though any invalid or unenforceable provision had not
been included herein.
(S)2. Confidential Information. The Stockholder recognizes and
------------ -----------
acknowledges that certain of the assets of Tran-Star, 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 Tran-Star. The Stockholder shall not 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 required by law, unless and until such Confidential
Information becomes publicly known or available other than as a consequence of
the breach by the Stockholder of its confidentiality obligations hereunder.
(S)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 Company, to:
AmeriTruck Distribution Corp.
City Center Tower II
301 Commerce
Suite 1101
Fort Worth, TX 76102
Attention: J. Michael May
With a copy sent contemporaneously to:
<PAGE>
-3-
John R. Utzschneider, Esq.
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
If to the Stockholder, to:
---------------------------------
---------------------------------
---------------------------------
With a copy sent contemporaneously to:
Daniel E. Paulus, Esq.
Frank & Frank
1102 Seventeenth Avenue South
Suite 300
Nashville, TN 37212
Any such notice shall be effective (a) if delivered personally, when
received, (b) if sent by overnight courier, when received, (c) if mailed, three
(3) days after being mailed as described above, and (d) if sent by written
telecommunication, when dispatched.
(S)4. Consent to Service of Process. Each party hereto agrees that
------- -- ------- -- -------
service of process upon it in any suit, action or proceeding shall be deemed in
every respect effective service of process upon it if given in the manner set
forth in (S)3.
(S)5. Remedies. The Stockholder acknowledges and agrees that the
--------
Company's remedy at law for a breach or threatened breach of any of the
provisions of this Agreement would be inadequate and, in recognition of this
fact, in the event of a breach or threatened breach by the Stockholder of any of
the provisions of this Agreement it is agreed that, in addition to its remedy at
law, the Company shall be entitled, without posting any bond, to equitable
relief in the form of specific performance, temporary restraining order,
temporary or permanent injunction or any other equitable remedy which may then
be available; provided that nothing in this (S)5 shall restrict the Stockholder
from opposing any such action. Nothing herein contained shall be construed as
prohibiting the Company from pursuing any other remedies available to it for
such breach or threatened breach. For purposes of this (S)5, "threatened
----------
breach" shall mean any indication, verbal or otherwise, of the Stockholder's
- ------
intention to breach, or of the Stockholder's impending breach of, any of the
provisions of this Agreement.
<PAGE>
-4-
(S)6. 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.
(S)7. 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.
(S)8. Counterparts. This Agreement may be executed in several
------------
identical counterparts, each of which when executed and delivered by the parties
hereto shall be an original, but all of which together shall constitute a single
instrument. In making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
(S)9. Assignment; Rights of Parties. The rights and obligations of
---------- ------ -- -------
the parties hereto shall inure to the benefit of, and shall be binding upon, the
successors and assigns of each of them.
(S)10. Entire Agreement. This Agreement and the Stock Purchase
------ ---------
Agreement embodies the entire agreement between the Company and the Stockholder,
and, except as otherwise expressly provided herein, this Agreement shall not be
affected by reference to any other document.
(S)11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
--------- ---
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF [DELAWARE] WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW.
(S)12. Construction. The language used in this Agreement will be
------------
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any party.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have caused this Agreement to be duly executed as an agreement
under seal as of the day and the year first above written.
<PAGE>
-5-
ALLWAYS SERVICES, INC.
-------------------------------------------------
AMERITRUCK DISTRIBUTION CORP.
By:
----------------------------------------------
Title:
<PAGE>
Draft of 05/13/97
Exhibit B-2 to
Stock Purchase Agreement
------------------------
NON-COMPETITION AGREEMENT
-------------------------
This NON-COMPETITION AGREEMENT (this "Agreement"), made as of this ____ day
---------
of ____________, 1997 by and between Tran-Star Services, Inc., a Delaware
corporation ("Services"), and AmeriTruck Distribution Corp., a Delaware
--------
corporation (the "Company").
-------
WHEREAS, the Company, Services, and Allways Services Inc., a Tennessee
corporation ("Allways"), are parties to a Stock Purchase Agreement, dated as of
-------
March 31, 1997 (the "Stock Purchase Agreement"), pursuant to which the Company
----- -------- ---------
will purchase from Services all of the outstanding capital stock (the "Stock")
-----
of Tran-Star, Inc., a Wisconsin corporation ("Tran-Star");
---------
WHEREAS, Services is an affiliate of Tran-Star, and pursuant to the Stock
Purchase Agreement will enter into a Lease Agreement (the "Lease") with Tran-
-----
Star whereby Tran-Star will lease from Services real property in Etters,
Pennsylvania for a one year term and agree to purchase such real property at the
end of the term for the price of $500,000; and
WHEREAS, the Company seeks to protect its investment in the business and
goodwill of Tran-Star, and is not willing to purchase the Stock and cause Tran-
Star to enter into the Lease unless Services agrees to be bound by the non-
competition provisions contained in this Agreement.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
(S)1. Non-Competition. Services acknowledges that the covenants and
---------------
agreements in this (S)1 are a condition precedent to the Company's obligation to
purchase the Stock from Services under the Stock Purchase Agreement and cause
Tran-Star to enter into the Lease, and that the Company would not purchase and
pay for the Stock or cause Tran-Star to enter into the Lease but for Services'
agreements herein. Services and the Company acknowledge that Tran-Star will
provide services to customers located in markets throughout the United States
and that engagement by Services in the Designated Industry (as hereinafter
defined) anywhere in the United States could cause Tran-Star and the Company
irreparable damage. Services will not (a) engage in the Designated Industry
anywhere in the United States, directly or indirectly, alone or as a
shareholder, partner or consultant of any other business organization, (b)
divert to any competitor of
<PAGE>
-2-
the Company or Tran-Star in the Designated Industry any customer of the Company
or Tran-Star, or (c) solicit or encourage any officer, employee or consultant of
the Company or Tran-Star to leave its employ for employment by or with Services
or any competitor of the Company or Tran-Star. The foregoing restriction shall
not prevent Services from owning five percent (5%) or less of the equity
securities of any publicly traded company. For purposes of this (S)1, the term
"Designated Industry" shall mean the business of providing transportation for
---------- --------
commodities or goods requiring temperature control or providing brokerage or
logistics services concerning commodities or goods requiring temperature
control. If at any time the provisions of this (S)1 shall be determined to be
invalid or unenforceable, by reason of being vague or unreasonable as to area,
duration or scope of activity, this (S)1 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 Stockholder agrees that
this (S)1 as so amended shall be valid and binding as though any invalid or
unenforceable provision had not been included herein.
(S)2. Confidential Information. Services recognizes and acknowledges that
------------ -----------
certain of the assets of Tran-Star, 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 Tran-Star. Services shall not 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 required by law, unless and until such Confidential Information
becomes publicly known or available other than as a consequence of the breach by
Services of its confidentiality obligations hereunder.
(S)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:
<PAGE>
-3-
If to the Company, to:
AmeriTruck Distribution Corp.
City Center Tower II
301 Commerce
Suite 1101
Fort Worth, TX 76102
Attention: J. Michael May
With a copy sent contemporaneously to:
John R. Utzschneider, Esq.
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
If to Services, to:
--------------------------------
--------------------------------
--------------------------------
With a copy sent contemporaneously to:
Daniel E. Paulus, Esq.
Frank & Frank
1102 Seventeenth Avenue South
Suite 300
Nashville, TN 37212
Any such notice shall be effective (a) if delivered personally, when
received, (b) if sent by overnight courier, when received, (c) if mailed, three
(3) days after being mailed as described above, and (d) if sent by written
telecommunication, when dispatched.
(S)4. Consent to Service of Process. Each party hereto agrees that
------- -- ------- -- -------
service of process upon it in any suit, action or proceeding shall be deemed in
every respect effective service of process upon it if given in the manner set
forth in (S)3.
(S)5. Remedies. Services acknowledges and agrees that the Company's
--------
remedy at law for a breach or threatened breach of any of the provisions of this
Agreement would be inadequate and, in recognition of this fact, in the event of
a breach or threatened
<PAGE>
-4-
breach by Services of any of the provisions of this Agreement it is agreed that,
in addition to its remedy at law, the Company shall be entitled, without posting
any bond, to equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable
remedy which may then be available; provided that nothing in this (S)5 shall
restrict Services from opposing any such action. Nothing herein contained shall
be construed as prohibiting the Company from pursuing any other remedies
available to it for such breach or threatened breach. For purposes of this (S)5,
"threatened breach" shall mean any indication, verbal or otherwise, of Services'
---------- ------
intention to breach, or of Services' impending breach of, any of the provisions
of this Agreement.
(S)6. 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.
(S)7. 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.
(S)8. Counterparts. This Agreement may be executed in several
------------
identical counterparts, each of which when executed and delivered by the parties
hereto shall be an original, but all of which together shall constitute a single
instrument. In making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
(S)9. Assignment; Rights of Parties. The rights and obligations of
---------- ------ -- -------
the parties hereto shall inure to the benefit of, and shall be binding upon, the
successors and assigns of each of them. .
(S)10. Entire Agreement. This Agreement and the Stock Purchase
------ ---------
Agreement embodies the entire agreement between the Company and Services, and,
except as otherwise expressly provided herein, this Agreement shall not be
affected by reference to any other document.
(S)11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
--------- ---
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE
TO PRINCIPLES OF CONFLICTS OF LAW.
<PAGE>
-5-
(S)12. Construction. The language used in this Agreement will be
------------
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any party.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed as an agreement under seal
as of the day and the year first above written.
TRAN-STAR SERVICES, INC.
-------------------------------------------------
AMERITRUCK DISTRIBUTION CORP.
By:
----------------------------------------------
Title:
<PAGE>
Draft of 05/31/97
Exhibit B-3 to
Stock Purchase Agreement
------------------------
NON-COMPETITION AGREEMENT
-------------------------
This NON-COMPETITION AGREEMENT (this "Agreement"), made as of this ____ day
---------
of ____________, 1997 by and between ProShell, Inc., a Delaware corporation
("ProShell"), and AmeriTruck Distribution Corp., a Delaware corporation (the
- ----------
"Company").
- --------
WHEREAS, the Company, Allways Services, Inc., a Delaware corporation
("Allways"), and Transtar Services Inc., a Tennessee corporation ("Services"),
- --------- --------
are parties to a Stock Purchase Agreement, dated as of March 31, 1997 (the
"Stock Purchase Agreement"), pursuant to which the Company will purchase from
- ------ -------- ---------
Allways all of the outstanding capital stock (the "Stock") of Tran-Star, Inc., a
-----
Wisconsin corporation ("Tran-Star");
---------
WHEREAS, ProShell is an affiliate of Tran-Star, and will recognize
significant benefits as a result of the consummation of the transactions
contemplated by the Stock Purchase Agreement, including the discharge of
indebtedness owed to Norfolk Southern Corporation; and
WHEREAS, the Company seeks to protect its investment in the business and
goodwill of Tran-Star, and is not willing to purchase the Stock unless ProShell
agrees to be bound by the non-competition provisions contained in this
Agreement.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, the parties agree as follows:
(S)1. Non-Competition. ProShell acknowledges that the covenants and
---------------
agreements in this (S)1 are a condition precedent to the Company's obligation to
purchase the Stock from Allways under the Stock Purchase Agreement, and that the
Company would not purchase and pay for the Stock but for ProShell's agreements
herein. ProShell and the Company acknowledge that Tran-Star will provide
services to customers located in markets throughout the United States and that
engagement by ProShell in the Designated Industry (as hereinafter defined)
anywhere in the United States could cause Tran-Star and the Company irreparable
damage. ProShell will not (a) engage in the Designated Industry anywhere in the
United States, directly or indirectly, alone or as a shareholder, partner or
consultant of
<PAGE>
-2-
any other business organization, (b) divert to any competitor of the Company or
Tran-Star in the Designated Industry any customer of the Company or Tran-Star,
or (c) solicit or encourage any officer, employee or consultant of the Company
or Tran-Star to leave its employ for employment by or with ProShell or any
competitor of the Company or Tran-Star. The foregoing restriction shall not
prevent ProShell from owning five percent (5%) or less of the equity securities
of any publicly traded company. For purposes of this (S)1, the term "Designated
----------
Industry" shall mean the business of providing transportation for commodities or
- --------
goods requiring temperature control or providing brokerage or logistics services
concerning commodities or goods requiring temperature control. If at any time
the provisions of this (S)1 shall be determined to be invalid or unenforceable,
by reason of being vague or unreasonable as to area, duration or scope of
activity, this (S)1 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 ProShell agrees that this (S)1 as so amended
shall be valid and binding as though any invalid or unenforceable provision had
not been included herein.
(S)2. Confidential Information. ProShell recognizes and acknowledges that
------------ -----------
certain of the assets of Tran-Star, 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 Tran-Star. ProShell shall not 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 required by law, unless and until such Confidential Information
becomes publicly known or available other than as a consequence of the breach by
ProShell of its confidentiality obligations hereunder.
(S)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:
<PAGE>
-3-
If to the Company, to:
AmeriTruck Distribution Corp.
City Center Tower II
301 Commerce
Suite 1101
Fort Worth, TX 76102
Attention: J. Michael May
With a copy sent contemporaneously to:
John R. Utzschneider, Esq.
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
If to ProShell, to:
---------------------------------
---------------------------------
---------------------------------
With a copy sent contemporaneously to:
Daniel E. Paulus, Esq.
Frank & Frank
1102 Seventeenth Avenue South
Suite 300
Nashville, TN 37212
Any such notice shall be effective (a) if delivered personally, when
received, (b) if sent by overnight courier, when received, (c) if mailed, three
(3) days after being mailed as described above, and (d) if sent by written
telecommunication, when dispatched.
(S)4. Consent to Service of Process. Each party hereto agrees that
------- -- ------- -- -------
service of process upon it in any suit, action or proceeding shall be deemed in
every respect effective service of process upon it if given in the manner set
forth in (S)3.
(S)5. Remedies. ProShell acknowledges and agrees that the Company's
--------
remedy at law for a breach or threatened breach of any of the provisions of this
Agreement would be inadequate and, in recognition of this fact, in the event of
a breach or threatened
<PAGE>
-4-
breach by ProShell of any of the provisions of this Agreement it is agreed that,
in addition to its remedy at law, the Company shall be entitled, without posting
any bond, to equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other equitable
remedy which may then be available; provided that nothing in this (S)5 shall
restrict ProShell from opposing any such action. Nothing herein contained shall
be construed as prohibiting the Company from pursuing any other remedies
available to it for such breach or threatened breach. For purposes of this (S)5,
"threatened breach" shall mean any indication, verbal or otherwise, of
---------- ------
ProShell's intention to breach, or of ProShell's impending breach of, any of the
provisions of this Agreement.
(S)6. 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.
(S)7. 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.
(S)8. Counterparts. This Agreement may be executed in several
------------
identical counterparts, each of which when executed and delivered by the parties
hereto shall be an original, but all of which together shall constitute a single
instrument. In making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart.
(S)9. Assignment; Rights of Parties. The rights and obligations of
---------- ------ -- -------
the parties hereto shall inure to the benefit of, and shall be binding upon, the
successors and assigns of each of them. .
(S)10. Entire Agreement. This Agreement and the Stock Purchase
------ ---------
Agreement embodies the entire agreement between the Company and ProShell, and,
except as otherwise expressly provided herein, this Agreement shall not be
affected by reference to any other document.
(S)11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
--------- ---
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE
TO PRINCIPLES OF CONFLICTS OF LAW.
<PAGE>
-5-
(S)12. Construction. The language used in this Agreement will be
------------
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any party.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have caused this Agreement to be duly executed as an agreement
under seal as of the day and the year first above written.
PROSHELL, INC.
--------------------------------------------------
AMERITRUCK DISTRIBUTION CORP.
By:
----------------------------------------------
Title:
<PAGE>
BD&G Draft 05/13/97 2:11 PM
[Letterhead of Frank & Frank, PLLC]
[NOTE: Subject to review and approval of Frank & Frank, PLLC]
Exhibit C to
------- -
Stock Purchase Agreement
------------------------
________________ __, 1997
AmeriTruck Distribution Corp.
301 Commerce Street, Suite 1101
Fort Worth, TX 76102
Re: Tran-Star, Inc.
---------------
Ladies and Gentlemen:
We have acted as counsel to Allways Services, Inc. a Tennessee
corporation (the "Seller"), Tran-Star, Inc., a Wisconsin corporation ("Tran-
------ ----
Star"), Transtar Services, Inc., a Delaware corporation ("Services"), in
--------
connection with the transactions contemplated by the Stock Purchase Agreement,
dated as of March 31, 1997 (the "Purchase Agreement"), by and among AmeriTruck
------------------
Distribution Corp., a Delaware corporation (the "Buyer"), the Seller and the
-----
Services, pursuant to which the Buyer has agreed to purchase all of the
outstanding capital stock of Tran-Star from the Seller. This opinion is being
delivered to you pursuant to Section 6.5 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. The Seller, Services and the
Managers 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 Non-Competition
Agreements, the Tax Agreement and the Lease Agreement (referred to hereinafter
collectively as the "Acquisition Agreements"), copies of the charter documents
----------------------
and by-laws of the Seller, Tran-Star and Services, resolutions of the Board of
Directors of the Seller, Tran-Star and Services 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 the Seller and
the directors and officers of Tran-Star, Services
<PAGE>
AmeriTruck Distribution Corp.
_____________ __, 1997
Page 2
and the Seller 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 Tran-Star, the Seller and Services in any
jurisdiction, our opinion relies entirely upon and is limited by those
certificates of public officials attached hereto as Exhibit 1.
------- -
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.
We have also assumed for purposes of rendering this opinion that any and
all indebtedness owed by the Selling Parties to Norfolk Southern Corporation has
been or will be paid in full and that all warrants, equity interests or other
rights to acquire any equity interest in the Selling Parties held by Norfolk
Southern Corporation have been extinguished.
Whenever our opinion herewith with respect to the existence or absence of
facts is indicated to be based upon our knowledge or awareness, it is intended
to signify that during the course of our representation of the Selling Parties,
as herein described, no information has come to our attention which would give
us actual knowledge of the existence or absence of such facts. However, except
to the extent expressly set forth herein, we have not undertaken any independent
investigation to determine the existence or absence of such facts, and no
inferences as to our knowledge as to the existence or absence of such facts
should be drawn from our representation of the Selling Parties.
Each opinion set forth below relating to the enforceability of any
agreement or instrument against the Selling Parties is subject to the following
general qualifications:
(i) as to any agreement to which any of the Selling Parties 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 Selling
Parties is a party, we assume that each of the Selling Parties has
received the agreed-to consideration therefor;
(iii) the enforceability of any obligation of any of the Selling Parties
may be limited by and are subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium,
liquidation, readjustment of debt, marshaling or other laws and
rules of law affecting the enforcement generally
<PAGE>
AmeriTruck Distribution Corp.
_____________ __, 1997
Page 3
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) and the discretion of the courts as
to remedies and to the extent that certain indemnification
provisions contained in the Acquisition Agreement may be limited or
rendered unenforceable by considerations of public policy.
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 Tennessee 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. In
rendering the opinions expressed herein, we have assumed that the laws of any
other jurisdiction are identical in all relevant respects to those of the State
of Tennessee. 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 State of Tennessee.
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 the Seller, Tran-Star and Services is a corporation duly
organized, validly existing and in corporate good standing under the laws of the
States of Tennessee, Wisconsin and Delaware, respectively.
<PAGE>
AmeriTruck Distribution Corp.
_____________ __, 1997
Page 4
2. Each of the Seller, Tran-Star and Services 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 of the
Acquisition Agreements to which it is a party by each of the Seller, Tran-Star
and Services and the consummation of the transactions contemplated thereby have
been duly authorized by all required corporate action on the part of each of the
Seller, Tran-Star and Services.
3. The authorized capital stock of Tran-Star consists of 2,800 shares of
Common Stock, no par value per share (the "Tran-Star Stock"). 206 shares of
---------------
Tran-Star Stock, which is all of the issued and outstanding capital stock of
Tran-Star, 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 Tran-Star.
4. The Acquisition Agreements have been duly executed and delivered by
each of the Selling Parties a party thereto and each constitutes the legal,
valid and binding obligation of each of the Selling Parties a party thereto,
enforceable against each of the Selling Parties a party thereto in accordance
with their terms.
5. Neither the execution nor the delivery by each of the Selling Parties
a party thereto of any of the Acquisition Agreements nor the consummation by
each of the Selling Parties a party 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
Incorporation or By-Laws of any of the Seller, Tran-Star or Services, 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) to the best of our knowledge, any
Tennessee or federal statute or regulation or rule relating to any of the
Selling Parties.
6. Except for (i) the filings and approvals referred to in Schedule
--------
3.7 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, to the best of our knowledge, no
approval or consent or other action by, and no filing or registration with, any
agency, authority or other unit of the State of Tennessee 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
each of the
<PAGE>
AmeriTruck Distribution Corp.
_____________ __, 1997
Page 5
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 hereby and disclaim any obligation to
advise you of any change, whether or not material, after the date hereof
pertaining to any matter referred to herein which may be brought to our
attention.
Your very truly,
FRANK & FRANK, PLLC
<PAGE>
Draft of 05/13/97 2:08 PM
Exhibit D to
---------
Stock Purchase Agreement
------------------------
___________ __, 1997
Allways Services, Inc.
Transtar Services, Inc.
455 Industrial Drive
Waupaca, Wisconsin 54981
Re: Tran-Star, 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 March 31, 1997 (the
"Purchase Agreement"), by and among the Buyer, Allways Services, Inc., a
- -------------------
Tennessee corporation (the "Seller"), and Transtar Services Inc., a Delaware
------
corporation ("Services"), pursuant to which the Buyer has agreed to purchase all
--------
of the outstanding capital stock of Tran-Star, Inc., a Wisconsin corporation
("Tran-Star"), from the Seller. This opinion is being delivered to you pursuant
- -----------
to Section 7.5 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.
In connection with the rendering of this opinion, we have reviewed
originals or copies of each of the Purchase Agreement, the Non-Competition
Agreements, the Tax Agreement, the Employment Agreements and the Lease Agreement
(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.
<PAGE>
______________ __, 1997
Page 2
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.
------- -
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) and the discretion of the courts as
to remedies and to the extent that certain
<PAGE>
______________ __, 1997
Page 3
indemnification provisions contained in the Acquisition Agreement
may be limited or rendered unenforceable by considerations of public
policy.
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. 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. Each of the Acquisition Agreements to which it is a party 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.
<PAGE>
______________ __, 1997
Page 4
4. 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) to our knowledge, any
Delaware, Massachusetts or federal statute or regulation or rule relating to the
Buyer.
5. Except for (i) the filing and termination or expiration of the waiting
period under the H-S-R Act and (ii) any filing and recording of documents
normally required in connection with the conveyance of title to personal and
real property or Intellectual Property, to our knowledge, 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
<PAGE>
EXHIBIT 12
AMERITRUCK DISTRIBUTION CORP. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(In thousands, except ratio amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1997* 1996*
----- -----
<S> <C> <C>
Earnings:
Income (loss) before income taxes and
extraordinary item $(2,920) $ 212
------- ------
Fixed charges:
Interest expense and amortization of
debt discount and premium on all
indebtedness 4,494 3,688
Portion of rent under long-term
operating leases representative of an
interest factor 683 380
------- ------
Total fixed charges 5,177 4,068
------- ------
Earnings before income taxes,
extraordinary item and fixed charges $ 2,257 $4,280
======= ======
Ratio of earnings to fixed charges (1) - 1.05x
======= ======
</TABLE>
(1) The Company's earnings were insufficient to cover fixed charges by $2,920
for the three month period ended March 31, 1997.
* Comparisons between periods are affected by acquisitions see Note 2
contained in the unaudited Notes to Consolidated Financial Statements.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMERITRUCK
DISTRIBUTION CORP'S. CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,110
<SECURITIES> 0
<RECEIVABLES> 28,493
<ALLOWANCES> 639
<INVENTORY> 1,286
<CURRENT-ASSETS> 42,170
<PP&E> 129,710
<DEPRECIATION> 29,509
<TOTAL-ASSETS> 189,920
<CURRENT-LIABILITIES> 29,870
<BONDS> 166,201
0
0
<COMMON> 35
<OTHER-SE> (5,611)
<TOTAL-LIABILITY-AND-EQUITY> 189,920
<SALES> 0
<TOTAL-REVENUES> 55,668
<CGS> 0
<TOTAL-COSTS> 54,053
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 132
<INTEREST-EXPENSE> 4,494
<INCOME-PRETAX> (2,920)
<INCOME-TAX> (1,168)
<INCOME-CONTINUING> (1,752)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,752)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
