<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: July 11, 1997
-------------
AMERITRUCK DISTRIBUTION CORP.
---------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-99716 75-2619368
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
City Center Tower II, Suite 1101
301 Commerce Street, Fort Worth, TX 76102-5384
-----------------------------------------------
Address of principal executive offices
Registrant's telephone number, including area code: (817) 332-6020
--------------
<PAGE>
Item 5. Other Events
On June 27, 1997, AmeriTruck Distribution Corp. (the "Company") acquired
-------
all of the capital stock of Tran-Star, Inc. ("Tran-Star"), which was owned by
---------
Allways Services, Inc. ("Allways"). Tran-Star is a carrier of refrigerated and
-------
non-refrigerated products. Tran-Star had 1996 revenues of $68.5 million. The
purchase price was $2.6 million, $1.6 million of which was paid in cash and $1
million of which was delivered in the form of a subordinated promissory note due
in 2000 (the "Seller Note"). Of this, $1.5 million in cash and the Seller Note
-----------
were assigned to Norfolk Southern Corporation ("Norfolk") as satisfaction of all
-------
amounts owed to Norfolk. The Company also assumed or refinanced indebtedness
estimated at approximately $30 million. In addition, under the terms of the
agreement, the Company leased a terminal at Etters, Pennsylvania from an Allways
affiliate for one year, and will purchase the property at the end of the lease
term for $400,000, less the amount of certain environmental remediation costs
incurred by the Company or Tran-Star in connection with the property. 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 Wyalusing, Pennsylvania.
Also as part of the transaction, the Company, Tran-Star, and Norfolk
entered into an Indemnity Agreement, pursuant to which Tran-Star and the Company
agreed to indemnify Norfolk for certain environmental liabilities with respect
to the Etters, Pennsylvania property.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
(a) Financial Statements of Business Acquired
-----------------------------------------
(i) Audited:
Report of Independent Auditors
Consolidated Balance Sheets at December 31, 1996 and 1995
Consolidated Statements of Operations and Retained
Earnings (Accumulated Deficit) and Cash Flows for years ended
December 31, 1996, 1995 and 1994.
Notes to Consolidated Financial Statements
(ii) Unaudited:
Note: It is currently impractical to provide financial
statements for Tran-Star, Inc. for the three months ended
March 31, 1997. These financial statements will be filed as
soon as they are available, but not later than September 8,
1997.
(b) Pro Forma Financial Information
-------------------------------
Note: It is currently impracticable to provide the pro forma
financial information required by Article 11 of
Regulation S-X. This pro forma financial information will be
filed as soon as it is available, but not later than
September 8, 1997.
(c) Exhibits
--------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
2 Stock Purchase Agreement, dated as of June 27, 1997, among
AmeriTruck Distribution Corp., Allways Services, Inc., and
Transtar Services, Inc.
The following exhibits have been omitted:*
Exhibit A: Seller Note
Exhibit B-1: Norfolk Southern Settlement
Exhibit B-2: Norfolk Southern Indemnity
Exhibit C: Lease Agreement
Exhibits D-1, D-2, D-3 and D-4: Employment
Agreements
Exhibits E-1, E-2, and E-3: Non-Competition
Agreements
Exhibit F: Tax Agreement
Exhibit G: Opinion of Counsel to Seller, Tran-Star,
and Services
Exhibit H: Opinion of Counsel to Buyer
* The Registrant undertakes to furnish supplementally to the
Commission, upon request, any omitted exhibit.
</TABLE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERITRUCK DISTRIBUTION CORP.
Dated: July 11, 1997 By: /s/ J. Michael May
------------------
J. Michael May
Title: General Counsel and Secretary
<PAGE>
Tran-Star, Inc.
Consolidated Financial Statements
Years ended December 31, 1996, 1995 and 1994
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Auditors..................................................... 1
Consolidated Financial Statements
Consolidated Balance Sheets........................................................ 2
Consolidated Statements of Operations and Retained Earnings (Accumulated Deficit).. 4
Consolidated Statements of Cash Flows.............................................. 5
Notes to Consolidated Financial Statements......................................... 7
</TABLE>
<PAGE>
Report of Independent Auditors
The Stockholder
Tran-Star, Inc.
We have audited the accompanying consolidated balance sheets of Tran-Star, Inc.
(the Company), a wholly owned subsidiary of Allways Services, Inc. (Allways), as
of December 31, 1996 and 1995, and the related consolidated statements of
operations and retained earnings (accumulated deficit) and cash flows for each
of the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the CompanyOs management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company at
December 31, 1996 and 1995, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Milwaukee, Wisconsin
February 27, 1997, except for Note 4, as to which the
date is February 28, 1997, and Notes 2 and 9, as to
which the date is June 27, 1997
1
<PAGE>
Tran-Star, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
DECEMBER 31
1996 1995
--------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (Note 4) $ 101,903 $ 888,317
Short-term investments (Note 4) 1,800,000 1,800,000
Accounts receivable, less allowance for
uncollectible accounts of $188,610 in
1996 and $61,380 in 1995 (Note 4) 6,677,362 6,939,729
Advances to drivers, less
allowance for
uncollectible accounts
of $35,857 in 1996 and
$60,605 in 1995 99,499 173,502
Due from Norfolk Southern 7,269 -
Corporation (Note 2)
Deposits 112,500 112,500
Prepaid expenses:
Licenses and permits 273,748 1,107,110
Messaging services - 228,001
Insurance 348,449 305,821
Other 37,916 36,889
Tires, maintenance parts and supplies 486,331 391,033
Lease receivables from drivers, less
allowance for uncollectible
accounts of $74,250 (Note 3) 87,428 -
Deferred income taxes (Note 6) 1,778,545 1,559,070
------------------------
Total current assets 11,810,950 13,541,972
Lease receivables from
drivers, less allowance
for uncollectible accounts
of $133,151 (Note 3) 156,503 -
Property and equipment:
Land 109,907 109,907
Building and
improvements 1,096,675 1,037,793
Tractors and trailers
(Note 4) 49,613,143 50,129,743
Systems and
communications
equipment 2,701,911 2,649,719
Office and garage
equipment 183,590 154,989
Automobiles 103,757 103,757
-------------------------
53,808,983 54,185,908
Less accumulated depreciation 19,629,986 11,849,558
-------------------------
34,178,997 42,336,350
-------------------------
Total assets $46,146,450 $55,878,322
=========================
</TABLE>
See accompanying notes
2
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31
1996 1995
---------------------------
<S> <C> <C>
LIABILITIES AND
STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 2,018,514 $ 2,000,905
Due to Norfolk Southern
Corporation (Note 2) 774,835 266,443
Due to affiliate (Note 8) 508,087 -
Accrued liabilities 2,531,445 2,182,213
Reserve for purchase
liabilities (Note 2) - 215,140
Reserve for freight and
casualty claims 2,972,813 3,133,767
Long-term debt due within
one year (Note 4) 10,091,413 10,250,623
--------------------------
Total current liabilities 18,897,107 18,049,091
Other long-term liabilities
(Note 2) - 704,835
Long-term debt (Note 4) 21,808,387 25,889,887
Deferred income taxes
(Note 6) 5,291,901 6,647,563
Commitments and
contingencies (Note 5)
Stockholder's equity
(Note 4):
Common stock, no par
value, 2,800 shares
authorized; 206 shares
issued and outstanding 6,123,000 6,123,000
Accumulated deficit (2,587,642) (319,813)
---------------------------
3,535,358 5,803,187
Less net due from
affiliates (Note 8) (3,386,303) (1,216,241)
Total stockholder's equity 149,055 4,586,946
---------------------------
Total liabilities and
stockholder's equity $46,146,450 $55,878,322
===========================
</TABLE>
See accompanying notes
3
<PAGE>
Tran-Star, Inc.
Consolidated Statements of Operations and Retained Earnings
(Accumulated Deficit)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995 1994
-----------------------------------------
<S> <C> <C> <C>
Operating revenue $68,475,522 $65,565,888 $60,338,842
Operating expenses:
Salaries, wages and
benefits 27,330,195 25,933,094 23,044,972
Operations and maintenance 23,705,631 20,362,481 17,765,193
Rents and purchased
transportation 3,818,140 3,638,185 4,646,227
Operating taxes and
licenses 2,213,706 2,159,769 2,128,425
Insurance and claims 3,123,186 3,919,911 3,186,646
Depreciation 8,044,477 6,739,192 5,700,368
Communications and
utilities 879,471 888,776 899,270
Miscellaneous operating
expenses 517,671 189,390 293,620
---------------------------------------
Total operating expenses 69,632,477 63,830,798 57,664,721
---------------------------------------
Income (loss) from (1,156,955) 1,735,090 2,674,121
operations
Other income (expense):
Interest expense, net (2,644,911) (2,319,634) (2,143,174)
Gain on sale of
equipment, net 13,900 38,311 45,346
---------------------------------------
Income (loss) before income
taxes (3,787,966) (546,233) 576,293
Income taxes (Note 6) (1,520,137) (158,443) 508,316
---------------------------------------
Net income (loss) (2,267,829) (387,790) 67,977
Retained earnings
(accumulated deficit),
beginning of year (319,813) 67,977 -
---------------------------------------
Retained earnings
(accumulated deficit), end
of year $(2,587,642) $ (319,813) $ 67,977
=========================================
</TABLE>
See accompanying notes.
4
<PAGE>
Tran-Star, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995 1994
------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $(2,267,829) $ (387,790) $ 67,977
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation 8,044,477 6,739,192 5,700,368
Gain on sale of equipment, net (13,900) (38,311) (45,346)
Deferred income taxes (1,575,137) (212,966) 459,423
Reversal of reserve for purchase (215,140) - -
liabilities
Change in assets and liabilities:
Accounts receivable 262,367 (692,727) 1,552,088
Advances to drivers 74,003 (66,169) (62,033)
Deposits - - (112,500)
Prepaid expenses 1,017,708 (199,736) (735,925)
Tires, maintenance parts and supplies (95,298) 156,327 108,625
Other long-term assets - 390,148 65,853
Accounts payable 17,609 343,912 284,497
Accrued liabilities 349,232 289,847 720,495
Accrued acquisition costs and - (1,371) (111,516)
purchase liabilities
Reserve for freight and casualty
claims (160,954) 1,316,980 171,791
----------------------------------------
Net cash provided by operating
activities 5,437,138 7,637,336 8,063,797
INVESTING ACTIVITIES
Property and equipment additions (236,789) (20,035,406) (4,747,223)
Proceeds from sale of equipment, net 141,530 796,849 1,313,469
Payment of deferred expenses related to
lease receivables from drivers (70,839) - -
Proceeds from payment on lease 48,943 - -
receivables from drivers
Reimbursement from (payment to) Norfolk
Southern Corporation (203,712) 34,092 1,381,982
Net advances to affiliates (1,661,975) (166,341) (1,181,773)
Purchase of short-term investments - (1,800,000) -
----------------------------------------
Net cash used in investing activities (1,982,842) (21,170,806) (3,233,545)
FINANCING ACTIVITIES
Proceeds from borrowings on long-term
debt 1,284,342 18,794,553 5,279,313
Payments on long-term debt (5,525,052) (9,252,222) (7,881,134)
----------------------------------------
Net cash provided by (used in)
financing activities (4,240,710) 9,542,331 (2,601,821)
----------------------------------------
Net increase (decrease) in cash and
cash equivalents (786,414) (3,991,139) 2,228,431
Cash and cash equivalents at beginning
of year 888,317 4,879,456 2,651,025
----------------------------------------
Cash and cash equivalents at end of year $ 101,903 $ 888,317 $ 4,879,456
========================================
</TABLE>
See accompanying notes.
5
<PAGE>
Tran-Star, Inc.
Consolidated Statements of Cash FLows (continued)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1996 1995 1994
---------------------------------------
<S> <C> <C> <C>
Cash paid during the year
for:
Interest $2,696,349 $2,626,805 $2,331,788
Income taxes 62,359 69,331 103,702
Significant non-cash transactions are as
follows:
During 1996, as discussed in Note 3,
the net book value of $222,035 of
certain tractors was accounted for
as sold to drivers pursuant to
capital leases; and
During 1994, prepaid messaging units
of $716,750 were received from
Norfolk Southern pursuant to the
Transtar Agreement, as discussed
in Note 2.
</TABLE>
6
<PAGE>
Tran-Star, Inc.
Notes to Consolidated Financial Statements
December 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Tran-Star, Inc.
(Tran-Star or the Company) and its wholly owned subsidiary Pro-Trans Services,
Inc. (Pro-Trans). All significant intercompany accounts and transactions have
been eliminated in consolidation.
ORGANIZATION
On December 31, 1993, Allways Services, Inc. (Allways) purchased all of the
issued and outstanding common stock of Transtar Services, Inc. (Transtar
Services), which owned Tran-Star, Inc., from Norfolk Southern (NS) pursuant to a
stock purchase agreement (the Transtar Agreement) (see Note 2).
After the acquisition, Transtar Services was a wholly owned subsidiary of
Allways, and Tran-Star was a wholly owned subsidiary of Transtar Services. On
December 31, 1994, Transtar Services declared a stock dividend transferring the
shares of Tran-Star to Allways. After the dividend, Tran-Star was a wholly owned
subsidiary of Allways.
NATURE OF OPERATIONS
The Company is a motor carrier operating throughout the United States and
certain Canadian provinces, specializing in time and temperature sensitive
services. The CompanyOs corporate office and main terminal is located in
Waupaca, Wisconsin.
The Company's revenues are generated primarily in the United States. The Company
performs periodic credit evaluations of its customersO financial condition and
generally does not require collateral.
Approximately 15%, 16% and 20% of the CompanyOs 1996, 1995 and 1994 consolidated
operating revenue, respectively, were from one customer.
7
<PAGE>
Tran-Star, Inc.
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three
months or less when purchased to be cash equivalents. These investments are
carried at cost which approximates market.
SHORT-TERM INVESTMENTS
Short-term investments are classified as available-for-sale securities and are
highly liquid debt instruments. These securities have a put option feature that
allows the Company to liquidate the investments at its discretion and are backed
by a letter of credit from the financial institution. These investments are
carried at cost which approximates market.
LICENSES AND PERMITS
Licenses and permits are amortized to expense over the term (generally one year)
of the applicable license or permit.
PREPAID MESSAGING SERVICES
The Company prepaid the cost of certain messaging services that were amortized
over the term of the agreement which expired in 1996.
TIRES, MAINTENANCE PARTS AND SUPPLIES
Tires, maintenance parts and supplies are recorded at cost and expensed when
used.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and are depreciated using the
straight-line method over the following useful lives (in years):
<TABLE>
<CAPTION>
<S> <C>
Buildings and improvements 5 - 35
Tractors and trailers 2 - 7
Systems and communication equipment 1 - 5
Office and garage equipment 1 - 5
Automobiles 1 - 4
</TABLE>
In calculating depreciation for tractors and trailers, a 20% salvage factor is
utilized.
8
<PAGE>
Tran-Star, Inc.
Notes to Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
The Company recognizes revenue and related transportation costs upon delivery.
INCOME TAXES
The Company is part of the consolidated income tax return of Allways. The
provision for income taxes recorded in the consolidated statements of operations
and retained earnings (accumulated deficit) reflects the provision for income
taxes of the Company on a stand-alone basis. Also, reported net operating loss
carryforwards and the related deferred tax assets represent those net operating
loss carryforwards created by the Company.
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates.
2. ACQUISITION OF TRAN-STAR
Allways accounted for its acquisition of Transtar Services and Tran-Star,
discussed in Note 1, under the purchase method. The $33,554,873 purchase price
consisted of $27,131,873 in cash and a $6,423,000 subordinated note due NS and
has been allocated based on the fair value of the assets acquired and
liabilities assumed and pushed down into the Company's consolidated financial
statements as follows:
<TABLE>
<CAPTION>
<S> <C>
Cash $ 451,025
Accounts receivable 7,799,090
Due from NS 2,110,750
Other assets 1,899,446
Fixed assets 31,824,192
Accounts payable (751,098)
Accrued liabilities (2,086,396)
Reserve for purchase liabilities (234,900)
Reserve for freight and casualty claims (2,594,200)
Deferred income taxes, net (4,863,036)
-------------
Total purchase price $33,554,873
=============
</TABLE>
9
<PAGE>
Tran-Star, Inc.
Notes to Consolidated Financial Statements (continued)
2. ACQUISITION OF TRAN-STAR (CONTINUED)
The Transtar Agreement had a base working capital provision which provided that,
to the extent the December 31, 1993 working capital, as defined, varied from the
agreed-upon amount, Allways or NS would be required to reimburse the other for
the difference. Accordingly, because the working capital was below the specified
amount at December 31, 1993, the Company established a receivable from NS
totaling $1,300,000, which was received in August 1994.
In addition, due to a shortfall in the number of tractors and trailers acquired
at December 31, 1993, the Company established a receivable from NS totaling
$810,750. This receivable was settled through a payment of $94,000 in cash and
$716,750 of messaging units in 1994.
The Transtar Agreement has cross-indemnification provisions relating to tax and
claim matters providing that, to the extent the actual payments are more or less
than the liabilities in place at December 31, 1993, NS will pay Allways or
Allways will pay NS, as the case may be, for any resulting difference. On
January 12, 1996, the Company signed an agreement with NS to settle the claim
payment matter (Claims Agreement). Pursuant to the Claims Agreement, all the
related claims will be settled by NS, which retains all risks related thereto.
The Claims Agreement provided for monthly payments of the recorded balance
through June 1998. On June 27, 1997, the Company and Allways entered into a
settlement agreement with NS, amending the payment terms of the Claims
Agreement, pursuant to which Tran-Star paid the remaining liability.
During 1996, management determined that the remaining reserve for purchase
liabilities, which was originally established at the time of the acquisition,
was unnecessary and reversed the remaining amount recorded. Accordingly,
$215,140 of income is included in insurance and claims expenses in the 1996
consolidated results of operations related to this reversal.
3. LEASE RECEIVABLES FROM DRIVERS
During 1996, the Company leased certain of its tractors to independent operators
under sales-type leases. The net gain generated upon sale and any interest
subsequently earned on the receivable balance have been deferred as an allowance
against the related lease
10
<PAGE>
3. LEASE RECEIVABLES FROM DRIVERS (CONTINUED)
receivables. The leases bear interest at 10% to 13% and are secured by the
respective tractor units. Future minimum lease payments under these leases
subsequent to December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Year Lease Payments Allowance Net Balance
--- ------------------------------------------------------
<S> <C> <C> <C>
1997 $ 161,678
1998 170,907
1999 118,747
-----------
Total 451,332 $ 207,401 $ 243,931
Less current portion 161,678 74,250 87,428
-----------------------------------------------------
Long-term portion $ 289,654 $ 133,151 $ 156,503
=====================================================
</TABLE>
4. LONG-TERM DEBT
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
---------------------------------
<S> <C> <C>
Notes due in monthly principal and interest payments, at
various interest rates ranging from 6.52% to 10% per
annum, through various dates through January 2001 $31,899,800 $36,140,510
Less current maturities 10,091,413 10,250,623
----------- -----------
$21,808,387 $25,889,887
</TABLE>
At December 31, 1996, all of the above notes were guaranteed by Allways and
secured by specific fleet assets, which, in total, comprise the majority of the
CompanyOs fleet. Over 75% of the Company's outstanding debt is also secured by
the Company's accounts receivable, contract rights, chattel paper and general
intangibles. The Company, pursuant to covenants in the loan and security
agreement covering various notes, may not pay dividends or make certain
investments, except as provided for in the Transtar Agreement or as approved by
the lender.
Aggregate maturities of long-term debt outstanding as of December 31, 1996, are
as follows:
<TABLE>
<S> <C>
1997 $10,091,413
1998 9,717,140
1999 6,785,670
2000 5,015,675
2001 289,902
-----------
$31,899,800
===========
</TABLE>
11
<PAGE>
Tran-Star, Inc.
Notes to Consolidated Financial Statements (continued)
4. LONG-TERM DEBT (CONTINUED)
At December 31, 1996, the Company had $3,032,000 of letters of credit
outstanding to support certain insurance policies.
On February 28, 1997, the Company obtained a revolving credit facility (the
Credit Facility), with interest payable monthly at 2% above the Citibank, N.A.
base rate, expiring March 31, 1998. Amounts available are limited to the lesser
of $6,000,000 or the amount of eligible receivables, as defined. The Credit
Facility requires the Company to maintain a debt service coverage ratio, as
defined, places limitations on employee advances and executive compensation
increases and prohibits payment of dividends. Outstanding balances and letters
of credit are collateralized by the accounts receivable and general intangible
assets of the Company, as defined. Outstanding letters of credit may not exceed
$4,000,000 and reduce the amount available under the Credit Facility. A fee of
2% per annum is due monthly on the outstanding letters of credit.
It was not practicable to estimate the fair value of the CompanyOs long-term
debt securities because of a lack of quoted market prices and the inability to
estimate fair value without incurring excessive costs.
5. COMMITMENTS AND CONTINGENCIES
The Company leases office space and parking facilities under noncancelable
operating leases expiring in 1999. The Company also rents office equipment under
cancelable operating leases. Certain leases provide for purchase or renewal
options. Rent expense charged to operations relating to all operating leases
totaled $65,068 in 1996, $84,847 in 1995 and $69,346 in 1994.
Future minimum payments, under noncancelable operating leases with remaining
terms in excess of one year, consisted of the following at December 31, 1996:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 53,648
1998 33,914
1999 15,000
----------
$102,562
==========
</TABLE>
The Company is involved in various litigation and legal proceedings, including
bodily injury and property damage claims. In the case of bodily injury and
property damage, the Company is partially self-insured and has accrued for all
claim exposure for which a loss is probable and reasonably estimable. Based on
current information, management
12
<PAGE>
Tran-Star, Inc.
Notes to Consolidated Financial Statements (continued)
5. COMMITMENTS AND CONTINGENCIES (CONTINUED)
believes that any difference between the future costs and the amounts accrued,
if any, for all existing litigation will not be material to the CompanyOs
financial position or results of operations.
6. INCOME TAXES
At December 31, 1996, Tran-Star has federal and state net operating loss
carryforwards of $11,264,000 and $6,725,000, which begin to expire in 2009 and
1997, respectively.
The provision (benefit) for income taxes is comprised of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
1996 1995 1994
---------------------------
(In Thousands)
<S> <C> <C> <C>
Current -
State $ 55 $ 55 $ 49
Deferred:
Federal (1,339) (181) 390
State (236) (32) 69
(1,575) (213) 459
---------------------------
Provision (benefit) for income taxes $(1,520) $(158) $ 508
===========================
</TABLE>
The differences between the provision (benefit) for income taxes and income
taxes (benefit) computed using the U.S. federal income tax rate (34%) for the
years ended December 31, 1996, 1995 and 1994, are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
1996 1995 1994
---------------------------
(In Thousands)
<S> <C> <C> <C>
Provision (benefit) at statutory rate $(1,288) $(186) $ 196
State taxes (benefit), net
of federal benefit (123) 13 56
Effect of nondeductible
(nontaxable) items (22) 31 242
Other (87) (16) 14
---------------------------
Provision (benefit) for income taxes $(1,520) $(158) $ 508
===========================
</TABLE>
13
<PAGE>
Tran-Star, Inc.
Notes to Consolidated Financial Statements (continued)
6. INCOME TAXES (CONTINUED)
At December 31, 1996 and 1995, the Company has the following net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting and income tax purposes:
<TABLE>
<CAPTION>
1996 1995
-------------------
(In Thousands)
<S> <C> <C>
Deferred tax liabilities:
Fixed assets $ 9,437 $ 8,657
Prepaid expenses 271 628
-------------------
Total deferred tax 9,708 9,285
liabilities
Deferred tax assets:
Accounts receivable 165 47
Freight, casualty,
health and worker's 1,572 1,706
compensation claims
Reserve for purchase - 82
liabilities
Revenue recognition-- 107 160
difference
inEaccounting methods
Vacation accrual 164 164
Net operating loss 4,145 2,009
carryforwards
Other 41 28
Total deferred tax assets 6,194 4,196
-------------------
Net deferred tax liability $ 3,514 $ 5,089
===================
</TABLE>
The net current and noncurrent components of deferred taxes recognized at
December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
-------------------
(In Thousands)
<S> <C> <C>
Net current asset $ 1,778 $ 1,559
Net noncurrent liability (5,292) (6,648)
-----------------
$(3,514) $(5,089)
=================
</TABLE>
7. PROFIT-SHARING PLAN
Tran-Star has a defined contribution profit-sharing plan covering substantially
all full-time employees (the Plan) that permits employees to make 401(k)
contributions. The Plan also provides for discretionary employer matching and
lump-sum contributions. The Company incurred expenses of approximately $45,000,
$32,000 and $23,000 related to the profit-sharing plan in 1996, 1995 and 1994,
respectively.
14
<PAGE>
Tran-Star, Inc.
Notes to Consolidated Financial Statements (continued)
8. RELATED-PARTY TRANSACTIONS
Effective January 1, 1995, the Company was charged a fee for management services
provided by Allways on behalf of the Company. For both 1996 and 1995, the charge
was $107,979, based on an allocation of specific management personnel salaries.
The Company rents a service terminal in Etters, Pennsylvania (Etters) from
Transtar Services under a month-to-month lease. Under the terms of the
agreement, in lieu of rental payments, the Company is responsible for payment of
property taxes and maintenance of the property. Total amounts expensed by the
Company relating to this property were $56,400, $54,052 and $52,522 for 1996,
1995 and 1994, respectively. Management believes these payments would
approximate rent to an unrelated third party for similar property.
Certain services, such as legal and accounting, are performed by third parties
for the benefit of both Tran-Star and Proline Carriers, Inc. (Proline), also a
wholly owned subsidiary of Allways. Where possible, these costs are allocated to
each entity based on actual services rendered. For expenses incurred benefiting
both Tran-Star and Proline, costs have been allocated 60% to Tran-Star and 40%
to Proline based upon an agreement between the companies.
The Company performed services, such as certain finance functions (e.g., credit
and collections, payroll, accounts payable and general ledger accounting and
reporting), on behalf of Proline and Proline-performed services, such as risk
management administration and driver recruitment, on behalf of the Company.
Costs for such services are determined from the salaries of the respective
employees performing these tasks, allocated based on the estimated time spent by
the employees serving the Company and Proline. Net amounts charged by Tran-Star
to Proline for these services totaled $536,000 and $372,000 for 1996 and 1995,
respectively. No amounts were charged for 1994.
The Company advances funds to certain entities owned by Allways. These advances
are reflected in the Due from Affiliates account in the accompanying
consolidated balance sheets. Interest is charged monthly based on the average
monthly outstanding balance at a rate approximating the Company's incremental
borrowing rate, which averaged 8.7%, 8.8% and 8.6% in 1996, 1995 and 1994,
respectively. The Company recorded interest income of $181,100, $71,400 and
$12,900 during 1996, 1995 and 1994, respectively, from these entities. On
February 18, 1997, the Board of Directors authorized, through
15
<PAGE>
Tran-Star, Inc.
Notes to Consolidated Financial Statements (continued)
8. RELATED-PARTY TRANSACTIONS (CONTINUED)
various intercompany transactions, the forgiveness of the Due from Affiliates.
Accordingly, these advances have been presented in the accompanying consolidated
balance sheets as reductions to stockholder's equity. This presentation is
reflective of the assumption that the advances are deemed dividends by the
Company to Allways and its affiliates.
On February 18, 1997, Allways and its wholly owned subsidiaries, including the
Company, entered into a Separation and Services Agreement (Separation Agreement)
effective January 1, 1997, confirming the 60/40 cost allocations described
above. Also, pursuant to the Separation Agreement, net cash collected or paid by
the Company on behalf of Proline from December 1, 1996, through and including
February 18, 1997, is to be remitted to Proline ($103,087 collected on behalf of
Proline through December 31, 1996). In addition, $405,000 is to be paid by the
Company to Proline as part of the Separation Agreement. At December 31, 1996,
management has recorded the amounts due Proline related to the Separation
Agreement of $508,087 as a current liability in the consolidated balance sheet.
9. SUBSEQUENT EVENT
On June 27, 1997, the Company was sold to AmeriTruck Distribution Corporation.
16
<PAGE>
STOCK PURCHASE AGREEMENT
BY AND AMONG
AMERITRUCK DISTRIBUTION CORP.,
the Buyer
ALLWAYS SERVICES, INC.,
the Seller
and
TRANSTAR SERVICES, INC.
Dated as of June 27, 1997
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
Table of Contents
----- -- --------
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
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
</TABLE>
<PAGE>
-ii-
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
-iii-
Section Page
------- ----
<S> <C> <C>
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. Consents of Third Parties..................................... 23
6.18. 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
</TABLE>
<PAGE>
-iv-
<TABLE>
<CAPTION>
Section Page
------- ----
<S> <C> <C>
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
</TABLE>
<PAGE>
-v-
LIST OF SCHEDULES AND EXHIBITS
------------------------------
<TABLE>
<CAPTION>
Schedules:
- ----------
<S> <C>
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
3.12(d)
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
9.7 Preliminary Specified Reserves
<CAPTION>
Exhibits
- --------
<S> <C>
Exhibit A Seller Note
Exhibit B-1 Norfolk Southern Settlement
Exhibit B-2 Norfolk Southern Indemnity
Exhibit C Lease Agreement
Exhibits D-1 to D-4 Employment Agreements
Exhibits E-1 to E-3 Non-Competition Agreements
Exhibit F Tax Agreement
Exhibit G Opinion of counsel to Seller, Tran-Star, and Services
Exhibit H Opinion of counsel to Buyer
</TABLE>
<PAGE>
STOCK PURCHASE AGREEMENT
----- -------- ---------
THIS STOCK PURCHASE AGREEMENT is dated as of the 27th day of June, 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, $2,600,000, (the "Purchase Price"), by
-------- -----
the payment of $1,600,000 in cash as provided in Section 2.2 (the "Cash
----
Portion") and the delivery of a $1,000,000 subordinated promissory note in the
- -------
form of Exhibit A hereto (the "Seller Note").
--------- ------ ----
2. CLOSING.
<PAGE>
-2-
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 June 27, 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, against payment of the
Cash Portion and delivery of the Seller Note as provided below.
(b) The Seller shall deliver to Buyer at Closing an agreement by
Norfolk Southern Corporation, in the form of Exhibit B-1 hereto (the "Norfolk
------- --- -------
Southern Settlement"), under which Norfolk Southern Corporation will agree to
- -------- ----------
accept the payment of $1,500,000 of the Cash Portion and the assignment to it of
the Seller Note, 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. In addition, at the Closing the
Buyer, Tran-Star and Norfolk Southern Corporation shall enter into an Indemnity
Agreement in the form of Exhibit B-2 hereto (the "Norfolk Southern Indemnity").
------- --- ------- -------- ---------
(c) The Seller, or its designee, shall deliver $1,500,000 to
Norfolk Southern Corporation by certified or bank check or by wire transfer, as
a disbursement from the Cash Portion of the Purchase Price and shall assign to
Norfolk Southern Corporation the Seller Note.
(d) Tran-Star and Services shall enter into the Lease Agreement in
substantially the form of Exhibit C hereto (the "Lease Agreement") for Services'
------- - ----- ---------
real property in Etters, Pennsylvania (the "Etters Property").
------ --------
(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 Cash Portion of
the Purchase Price to the Seller by certified or bank check or by wire transfer.
<PAGE>
-3-
(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.
(h) Each of Robert Goldberg, Daniel Van Alstine, Terry Wallace and
Paul Herzog (the "Managers") shall execute and deliver an Employment Agreement
--------
in the form of Exhibits D-1 to D-4 hereto (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 E-1 to E-3 hereto (the "Non-
--- --- ---
Competition Agreements").
- ----------------------
(j) The Buyer, the Seller and Services shall enter into a Tax
Indemnification Agreement in the form of Exhibit F hereto (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, if
any, to which it is a party (collectively, the "Transaction Agreements"), 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
<PAGE>
-4-
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, 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
<PAGE>
-5-
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 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 May 31, 1997 and the related statements of income, retained
earnings and cash flows of Tran-Star for the five-months 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
<PAGE>
-6-
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 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
<PAGE>
-7-
course of business since the date of the Audited Balance Sheets), all free and
clear of all 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 May 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
----
<PAGE>
-8-
Response, Compensation and Liability Act of 1980 as amended ("CERCLA"), the
------
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal
----
Water Pollution Control Act, the Solid Waste Disposal Act, as amended, the
Federal Clean Water Act, the Federal Clean Air Act, the Toxic Substances
Control Act, or any state or local statute, regulation, ordinance, order or
decree relating to health, safety or the environment (hereinafter
"Environmental Laws");
------------- ----
(ii) 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 or any predecessor in interest has generated, transported or
disposed of has been found at any site at which a federal, state or local
agency or other third party has conducted or has ordered that 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
<PAGE>
-9-
substance, exposure to which is prohibited, limited or regulated by any
Environmental Law, or which poses a hazard to the health and safety of the
occupants of such properties or those adjacent thereto; (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
<PAGE>
-10-
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 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;
<PAGE>
-11-
(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;
(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
<PAGE>
-12-
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)
-------- -------
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
<PAGE>
-13-
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 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.
<PAGE>
-14-
(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.
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,
<PAGE>
-15-
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 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 (as
defined in Article 11).
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
<PAGE>
-16-
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
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.
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
<PAGE>
-17-
deposit box in any bank and no Person 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, the
other Transaction Agreements to which it is to be a party and the Seller Note
and the consummation of the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by the Buyer and constitutes, and
at the Closing, each of the other Transaction Agreements to which it is to be a
party and the Seller Note 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, the other Transaction Agreements to which it is to be a party and the
Seller Note 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, the other Transaction Documents to
which it is a party and the Seller Note.
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 and the Seller Note 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.
<PAGE>
-19-
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 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 5.3, 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
<PAGE>
-20-
usual and ordinary course of business and consistent with the business practices
of Tran-Star and its Subsidiaries.
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
<PAGE>
-21-
default, would accelerate obligations of Tran-Star or any of its Subsidiaries or
would permit cancellation of any such contract.
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, in the form of Exhibit G 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. 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.
6.18. 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 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
<PAGE>
-24-
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, in the form of Exhibit H, 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.
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,
settlements, judgments, losses, damages, costs and expenses, including without
<PAGE>
-25-
limitation the reasonable fees and disbursements of counsel and environmental
consultants and the costs incurred investigating and remediating any liability
of the type referred to in (iv) below (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:
(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;
<PAGE>
-26-
(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) 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.
----------- -- ---------------
<PAGE>
-27-
(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 $250,000 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) With respect to any Etters Environmental Claims (as defined in
Article 11), the Seller and Services shall not be required to indemnify the
Indemnified Buyer Parties until the aggregate amount of Losses for which the
Indemnified Buyer Parties are otherwise entitled to indemnification pursuant to
this Article 9 exceeds the Etters Threshold Amount (as defined in Article 11),
whereupon the Indemnified Buyer Parties shall be entitled to be paid the excess
of the aggregate amount of all Losses arising from Etters Environmental Claims
over the Etters Threshold Amount.
(d) 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.
(e) 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 to the extent that the
Seller is not entitled to such tax refund pursuant to the Tax Agreement and
(iii) any amounts otherwise received from third parties with respect to the
Losses giving rise to the
<PAGE>
-28-
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, 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) Schedule 9.7 contains a detailed schedule of reserves set forth on
-------- ---
Tran-Star's books and records as of May 31, 1997. The Seller hereby represents
and warrants that these reserves have been determined based on generally
accepted accounting principles applied on a consistent basis. The reserves on
Schedule 9.7 are referred to in this Agreement as the "Preliminary Specified
- -------- --- ----------- ---------
Reserves".
- --------
(b) Within two weeks after the Closing the Seller will prepare an
update of the Preliminary Specified Reserves to reflect events occurring between
May 31, 1997 and the Closing. This update will be determined based on generally
accepted accounting principles applied on a consistent basis. The form and
amount of such update shall be subject to the review and approval of the Buyer,
not to be unreasonably withheld. The reserves on this updated schedule, as so
approved by the Buyer, are referred to in this Agreement as the "Specified
---------
Reserves".
- --------
(c) 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.
------
<PAGE>
-29-
(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 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.
(c) Etters Environmental Claims. With respect to Etters
------ ------------- ------
Environmental Claims, the Buyer shall assume the defense of all Etters
Environmental Claims, and shall have the authority to negotiate, compromise and
settle all Etters Environmental Claims, except that if any such compromise or
settlement would cause the total Losses arising to the applicable date from
Etters Environmental Claims to exceed the Etters Threshold Amount, then such
compromise or settlement shall be subject to the consent of the Seller and
Services, not to be unreasonably withheld or delayed. The Seller and Services
shall retain the right to employ their own counsel and to participate in the
defense of any Etters Environmental Claim (subject to the Buyer's right to
control the defense as provided above), but they shall bear and shall be solely
responsible for their 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
<PAGE>
-30-
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 June 30, 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.
"Etters Environmental Claims": Any claim by an Indemnified Buyer Party
------ ------------- ------
under Section 9.1 of the Stock Purchase Agreement, including any claim not then
subject to indemnification because of the limitations of Section 9.5(c),
relating to or arising from (i) Environmental Laws and the Etters Property,
(ii) the release, emission, discharge or presence of any Hazardous Substance,
toxic pollutants or other chemical by-products at, onto, from or into the Etters
Property or (iii) any of the matters disclosed on Schedule 3.13(b)(2)-(10).
-------- ---------------
"Etters Threshold Amount": An amount equal to $1,000,000.
------ --------- ------
"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 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
<PAGE>
-31-
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.
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.
------- -- ------------
<PAGE>
-32-
(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, except that the Buyer acknowledges that Tran-Star has or will
prior to the Closing pay on behalf of itself and the Seller the fees and
expenses of attorneys, accountants and outside advisors in the amounts set forth
on Schedule 12.3 hereto.
-------- ----
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
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
<PAGE>
-33-
Fort Worth, Texas 76102
with a copy sent contemporaneously to:
John R. Utzschneider, Esq.
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
Any such notice shall be effective (a) if delivered personally, when
received, (b) if sent by overnight courier, when receipted for, (c) if mailed,
three (3) days after being mailed as described above, and (d) if sent by written
telecommunication, 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.
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.
<PAGE>
-34-
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.
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 Officer
ALLWAYS SERVICES, INC.
By: /s/ Robert Goldberg
---------------------
Title: President
TRANSTAR SERVICES, INC.
By: /s/ Robert Goldberg
---------------------
Title: President
