================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 13, 1998
AMERTRANZ WORLDWIDE HOLDING CORP.
(Exact name of Registrant as specified in charter)
<TABLE>
<S> <C> <C> <C>
Delaware 001-14474 11-3309110
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification
incorporation or organization) Number)
</TABLE>
112 East 25th Street
Baltimore, Maryland 21218
(410) 338-0127
(Address, including zip code and telephone number, including area code, of
Registrant's principal executive offices)
7001B Cessna Drive, P.O. Box 35329
Greensboro, North Carolina 27425
(Former name or former address of Registrant, if changed since last report)
================================================================================
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2. Acquisition or Disposition of Assets.
On July 13, 1998, Caribbean Air Services, Inc. ("CAS"), a wholly-owned
subsidiary of Amertranz Worldwide Holding Corp. (the "Company"), sold
substantially all of the operating assets of CAS to Geologistics Air Services,
Inc., an indirect wholly-owned subsidiary of Geologistics Corporation
("Geologistics"), for $27 million in cash, in accordance with the terms of the
Asset Purchase Agreement among the parties dated June 15, 1998 (the "Asset
Purchase Agreement").
Under the terms of the Asset Purchase Agreement, CAS retained its
accounts receivable, and the Company expects that CAS will realize an additional
$4 million from CAS's accounts receivable after payment of its liabilities.
Other than with respect to certain obligations pursuant to leases and
other agreements included in the assigned assets, Geologistics did not assume
any obligations of the Company or CAS.
The purchase price for the assets of CAS and the other principal terms
of the Asset Purchase Agreement were determined through arm's length
negotiations.
In connection with the sale of assets by CAS, Richard A. Faieta, a
director and President of CAS and a director and Executive Vice President of the
Company became President of Geologistics Air Services, Inc. and resigned as a
director and officer of the Company, CAS and each of the Company's other
subsidiaries.
For the nine months ended March 31, 1998, revenues from the operations
of CAS contributed approximately $40 million to the Company's total revenues,
and income from the operations of CAS contributed approximately $3.2 million to
the Company's operating income.
Pro forma financial information with respect to the Company, as
required by Article 11 of Regulation S-X, are included in Item 7.
- 1 -
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The following pro forma financial information and exhibits are filed
herewith and set forth following the signatures hereto:
<TABLE>
<CAPTION>
PAGE
<S> <C> <C> <C> <C> <C> <C>
(b) Pro Forma Financial Information
AMERTRANZ WORLDWIDE HOLDING CORP.
Pro Forma Financial Information Explanatory Note F-1
Pro Forma Consolidated Balance Sheet as of March 31, 1998 F-2
Pro Forma Consolidated Statement of Operations for the Nine Months Ended March 31, 1998 F-3
Pro Forma Consolidated Statement of Operations for the Year Ended June 30, 1997 F-4
Notes and Management's Assumptions to Pro Forma Financial Statements F-5
(c) Exhibits
The following exhibits are filed herewith:
Exhibit No.
2.1 Asset Purchase Agreement dated as of June 15, 1998, by and among
Amertranz Worldwide Holding Corp., a Delaware corporation; Caribbean
Air Services, Inc., a Delaware corporation; and Geologistics
Corporation, a Delaware corporation E-1
99.1 Press Release, dated July 14, 1998, issued by Amertranz Worldwide
Holding Corp. E-37
</TABLE>
Pursuant to Item 601(b)(2) of Regulation S-K, the schedules and exhibits to the
Asset Purchase Agreement are briefly described on the index thereto (on page
E-36) but have been omitted from this filing. The Company will furnish
supplementally a copy of any omitted schedule or exhibit to the Commission upon
request.
- 2 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERTRANZ WORLDWIDE HOLDING CORP.
Date: July 27, 1998 By: /s/ Stuart Hettleman
-------------------------------
Stuart Hettleman, President
C71844A.198
- 3 -
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP.
PRO FORMA FINANCIAL INFORMATION
EXPLANATORY NOTE
The pro forma financial information statements and notes and
management's assumptions included in this report have been prepared on the
following basis:
1. The pro forma balance sheet for the nine months ended March
31, 1998 assumes that the sale of the CAS assets closed on March 31, 1998. The
adjustments reflect the proceeds from the sale, the closing costs incurred, the
elimination of assets sold, the retirement of certain debt, an estimated
provision for income taxes and the net effect on shareholders' equity.
2. The pro forma income statement for the nine months ended
March 31, 1998 assumes that the sale of the CAS assets closed on July 1, 1997.
The adjustments reflect the elimination of all revenue and direct expenses of
CAS, the elimination of interest expense due to the repayment of debt, and an
increase in interest income resulting from the investment of the sale proceeds
in overnight repurchase agreements.
3. The pro forma income statement for the year ended June 30,
1997 assumes that the sale of the CAS assets closed on July 1, 1996. The
adjustments reflect the elimination of all revenue and direct expenses of CAS,
the elimination of interest expense due to the repayment of debt, and an
increase in interest income resulting from the investment of the sale proceeds
in overnight repurchase agreements.
The pro forma financial information is unaudited and not necessarily
indicative of the consolidated results which actually would have occurred if the
sale had been concluded at the beginning of the period presented, nor does it
purport to represent the future financial position and results of operations for
future periods.
F-1
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
Pro Forma Pro Forma
March 31, 1998 Adjustments March 31, 1998
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 406,872 $ 9,505,948 (1) $ 9,912,820
Accounts receivable, net of allowance for doubtful accounts of $622,980 16,382,301 16,382,301
Prepaid expenses and other current assets 665,667 (252,554) (2) 413,113
Due from affiliates 0 0
------------ ------------
Total current assets 17,454,840 9,253,394 26,708,234
PROPERTY AND EQUIPMENT, net 925,488 (304,133) (3) 621,355
OTHER ASSETS 94,080 1,945,923 (4) 2,040,003
GOODWILL, net of accumulated amortization of $1,156,357 13,798,667 13,798,667
------------ ------------
Total assets $ 32,273,075 $10,895,184 $ 43,168,259
============ =========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 7,446,348 $ 7,446,348
Accrued expenses 2,321,133 (344,433) (5) 1,976,700
Accrued transportation expenses 5,382,448 5,382,448
Reserve for restructuring 1,306,059 1,306,059
Note payable to bank 6,346,095 (6,346,095) (5) 0
Note payable to affiliate 500,754 (500,754) (5) 0
Notes payable to creditors 53,835 53,835
Current portion of long-term debt due to affiliate 3,046,867 (3,046,867) (5) 0
Current portion of long-term debt 50,000 50,000
Dividends payable 58,437 58,437
Due to affiliates 0 0
Taxes payable 115,000 1,250,000 (6) 1,365,000
Leases obligation-current portion 12,063 12,063
------------ ------------
Total current liabilities 26,639,039 (8,988,149) 17,650,890
LONG-TERM DEBT DUE TO AFFILIATE 4,000,000 (4,000,000) (5) 0
LONG-TERM DEBT 50,000 50,000
LEASE OBLIGATION--LONG TERM 6,251 6,251
------------ ------------
Total liabilities $ 30,695,290 (12,988,149) $ 17,707,141
------------ ----------- ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred Stock, $10 par value; 2,500,000 shares authorized,
610,546 shares issued and outstanding 6,105,460 6,105,460
Common Stock, $.01 par value; 15,000,000 shares authorized,
8,419,094 shares issued and outstanding 84,190 84,190
Paid-in-capital 22,496,331 50,000 (7) 22,546,331
Accumulated (deficit) retained earnings (27,096,946) 23,833,333 (8) (3,263,613)
Less: Treasury stock, 106,304 shares held at cost (11,250) (11,250)
------------ ------------
Total stockholders' equity (deficit) $ 1,577,785 $23,883,333 $ 25,461,118
------------ ----------- ------------
Total liabilities and stockholders' equity (deficit) $ 32,273,075 $10,895,184 $ 43,168,259
============ =========== ============
</TABLE>
The accompanying notes and management's assumptions to pro forma financial
statements are an integral part of these consolidated statements.
F-2
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
Nine months ended March 31, 1998
As Reported Adjustments Pro Forma
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Operating revenue $ 74,000,028 $ 39,529,422 (9) $ 34,470,606
Cost of transportation 57,829,361 31,194,365 (9) 26,634,996
------------ ------------ ------------
Gross profit 16,170,667 8,335,057 7,835,610
Selling, general and administrative expense 14,529,621 5,113,443 (9) 9,416,178
------------ ------------ ------------
Operating income (loss) 1,641,046 3,221,614 (1,580,568)
Interest (expense) income (1,066,256) (1,369,739) (9) 303,483
Other income (expense), net 168,783 (58,346) (9) 227,129
------------ ------------ ------------
Income (loss) before income taxes $ 743,573 $ 1,793,529 $ (1,049,956)
============ ============ ============
</TABLE>
The accompanying notes and management's assumptions to pro forma financial
statements are an integral part of this consolidated statement.
F-3
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
Twelve months ended June 30, 1997
As Reported Adjustments Pro Forma
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Operating revenue $ 75,352,065 $ 40,690,013 (10) $ 34,662,052
Cost of transportation 57,198,797 32,498,656 (10) 24,700,141
------------ ------------ ------------
Gross profit 18,153,268 8,191,357 9,961,911
Selling, general and administrative expense 23,985,223 4,920,947 (10) 19,064,276
Restructuring charge 3,407,482 0 3,407,482
------------ ------------ ------------
Operating income (loss) (9,239,437) 3,270,410 (12,509,847)
Interest (expense) income (1,335,833) (1,722,910) (10) 387,077
Other income (expense), net 66,936 (3,422) (10) 70,358
------------ ------------ ------------
Income (loss) before income taxes $(10,508,334) $ 1,544,078 $(12,052,412)
============ ============ ============
</TABLE>
The accompanying notes and management's assumptions to pro forma financial
statements are an integral part of this consolidated statement.
F-4
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP.
NOTES AND MANAGEMENT'S ASSUMPTIONS TO
PRO FORMA FINANCIAL STATEMENTS
1. Cash and cash equivalents
The net cash received from the sale (excluding $2,000,000 which is
being held in escrow), after the elimination of costs incurred to close the
transaction and the retirement of certain debt (refer to Note 5) was $9,505,948.
2. Prepaid expenses and other current assets
Includes the sale of $227,554 of CAS assets and a $25,000 reduction
resulting from the prepayment of certain closing costs.
3. Property and equipment, net
As of March 31, 1998, includes the sale of $304,133 of CAS assets.
4. Other assets
Includes a $2,000,000 increase resulting from funds being held in
escrow until the first anniversary of the closing date, and the sale of $54,077
of CAS assets.
5. Debt
As of March 31, 1998, the following debt would have been retired from
the sale proceeds:
<TABLE>
<CAPTION>
Short-term Long-term Total
<S> <C> <C> <C>
Promissory note to TIA and CFS $ 3,046,867 $4,000,000 $ 7,046,867
Revolving loan to TIA and CFS-principal 500,754 -- 500,754
Revolving loan to TIA and CFS-interest(a) 344,433 -- 344,433
Asset-based financing 6,346,095 -- 6,346,095
----------- -----------
Total debt retired $10,238,149 $4,000,000 $14,238,149
- - ----------------------------
<FN>
(a) Included in accrued expenses at March 31, 1998
</FN>
</TABLE>
6. Taxes payable
A tax provision totaling $1,250,000 has been estimated as a result of
this sale.
7. Paid-in-capital
Reflects the issuance of stock warrants to the Company's independent
financial advisor as settlement for fees totaling $50,000.
F-5
<PAGE>
AMERTRANZ WORLDWIDE HOLDING CORP.
NOTES AND MANAGEMENT'S ASSUMPTIONS TO
PRO FORMA FINANCIAL STATEMENTS -- (Continued)
8. Accumulated (deficit) retained earnings
At March 31, 1998, a gain of approximately $23,833,000 would have been
realized from the sale. CAS assets totaling approximately $942,000 would have
been sold, closing costs of approximately $975,000 were incurred, and a tax
provision of $1,250,000 was estimated.
9. Proforma Consolidated Statement of Operations for the nine months ended March
31, 1998
Reflects the elimination of all revenue and direct expenses of CAS, and
the elimination of interest expense due to the assumed repayment of debt. In
addition, interest income has been increased by $300,000 resulting from the
assumed investment of the sale proceeds in overnight repurchase agreements.
10. Proforma Consolidated Statement of Operations for the year ended June 30,
1997
Reflects the elimination of all revenue and direct expenses of CAS, and
the elimination of interest expense due to the assumed repayment of debt. In
addition, interest income has been increased by $400,000 resulting from the
assumed investment of the sale proceeds in overnight repurchase agreements.
F-6
<PAGE>
Exhibit 2.1
ASSET PURCHASE AGREEMENT EXECUTION COPY
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the 15th day of June, 1998 by and between CARIBBEAN AIR SERVICES,
INC., a Delaware corporation ("CAS"); AMERTRANZ WORLDWIDE HOLDING CORP., a
Delaware corporation ("Holding"); and GEOLOGISTICS CORPORATION, a Delaware
corporation (the "Purchaser").
EXPLANATORY STATEMENT
CAS is a wholly-owned subsidiary of Holding. CAS desires to sell and
the Purchaser desires to purchase all of the assets used in the business of CAS,
on the terms and conditions hereinafter set forth.
NOW THEREFORE, for the mutual consideration set out herein, the parties
hereto agree as follows:
1. Definitions; Rules of Construction.
1.1. For purposes of this Agreement, the terms set forth below
shall have the following meanings:
Affiliate - Any person or entity that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is under
common control with the person or entity specified. For purposes of this
definition, control of the person or entity means the power, direct or indirect,
to direct or cause the direction of the management and policies of such person
or entity whether by Contract or otherwise.
Amertranz Group - Holding and CAS, collectively.
Assumed Obligations - As defined in Section 3.
Assumption Agreement - The Assumption Agreement substantially in
the form attached hereto as Exhibit A, together with such other good and
sufficient instruments of assumption, in form and substance reasonably
acceptable to CAS and the Purchaser, as shall be effective to cause the
Purchaser to assume the Assumed Obligations.
Bill of Sale - The Bill of Sale substantially in the form attached
hereto as Exhibit B, together with such other good and sufficient instruments of
conveyance, assignment and transfer, in form and substance reasonably acceptable
to CAS and the Purchaser, as shall be effective to vest in the Purchaser good
title to the CAS Assets.
CAS - As defined in the introductory paragraph of this Agreement.
CAS Assets - All of the assets of CAS including those listed on
Schedule 1.1 and the active, prospective, and historical customer lists for the
past five years, related current and historical business records relating to
prospective, active and inactive customers and business for the preceding five
years (including pricing information, costing and vendor information as to
transportation services); all equipment, vehicles, parts, tools, computers and
computer equipment, and other assets; all associated computerized information
relating to such business and customers (including computer disks and tapes);
E-1
<PAGE>
all information relating to current, historical, and planned marketing and sales
of services; all interest in the name "Caribbean Air Services", and all service
marks utilized in connection therewith; all local, 800 and international
telephone and telefax numbers utilized by CAS in connection with its businesses;
all goodwill; all pre-paid expenses; the leases for CAS's facilities, including
all furniture, fixtures and equipment used in or held for use in each such
facility or in connection therewith (subject to dispositions or replacements
prior to Closing in the ordinary course of business); all of CAS's rights under
the Freight Handling Agreement; all of CAS's rights under the CAS-D Freight
Handling Agreement (including the right to receive commissions thereunder); all
vendor, customer and sales representative contracts of CAS in connection with
its business; all other contracts of CAS in connection with its business; all
governmental licenses or authorizations with respect to the conduct of the CAS
Business; all other licenses pursuant to which any assets used in the CAS
Business are used; and all other tangible and intangible assets of CAS. "CAS
Assets" shall not include any of CAS's cash on hand, cash in depositories, tax
refunds, cash equivalents, accounts receivable, receivables due from Holding or
any of Holding's subsidiaries, and any interest of CAS in the "Arthur J. Rogers"
lease of space in Chicago.
CAS Business - The business heretofore operated by CAS.
CAS-D Freight Handling Agreement - The Freight Handling Agreement
attached hereto as Schedule 1.2, dated January 1, 1996, between CAS, Caribbean
Air Services Dominica, Inc., a corporation organized under the laws of Puerto
Rico, and such corporation's stockholders.
CAS Shares - All of the issued and outstanding shares of Common
Stock of CAS, par value $.01 per share.
CERCLA - The Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, and the rules and regulations promulgated
thereunder.
CERCLIS - The Comprehensive Environmental Response and Liability
Information System, as provided for by 40 C.F.R. ss.300.5.
Closing - The closing of the transactions contemplated by this
Agreement.
Closing Date - The later of (i) July 15, 1998, or (ii) 15 days
following the expiration of the waiting period under the HSR Act, but in any
event, no later than September 1, 1998, unless otherwise mutually agreed to by
the parties in writing.
Code - The Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.
Contracts - As defined in Section 7.19.
Employee Benefit Plans - As defined in Section 7.25(i).
Environmental Claim - With respect to any person, any written or
oral notice, claim, demand or other communication (collectively, a "claim") by
any other person alleging or asserting such person's liability for investigatory
costs, cleanup costs, Governmental or Regulatory Authority response costs,
damages to natural resources or other property, personal injuries, fines or
penalties arising out of, based on or resulting from (a) the presence, or
Release into the environment, of any Hazardous Material at any location, whether
or not owned by such person, or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law. The term
"Environmental Claim" shall include,
E-2
<PAGE>
without limitation, any claim by any Governmental or Regulatory Authority for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and any claim by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence of Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
Environmental Law - Any law or order relating to the regulation or
protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
ERISA - The Employee Retirement Income Security Act of 1974, as
amended, and the regulations issued thereunder.
Exchange Act - The Securities Exchange Act of 1934, as amended.
Escrow Agreement - the Escrow Agreement substantially in the form
attached hereto as Exhibit C.
Escrow Amount - As defined in Section 4.1.2.
Facility Leases - The current leases entered into by CAS with
respect to leased office, warehouse, and terminal space and other real property.
Fairness Opinion - As defined in Section 13.1.
Freight Handling Agreement - The Cargo Aircraft Charter Agreement
dated February 28, 1994, between Florida West Airlines, Inc. and TIA, Inc., a
Delaware corporation, assigned by TIA, Inc. to CAS and assigned by Florida West
Airlines, Inc. to Tradewinds Airlines, Inc., a Delaware corporation, and the
Cargo Aircraft Charter Agreement dated as of July 1, 1998 between Tradewinds
Airlines, Inc. and CAS, all as attached hereto as Schedule 1.2.
GAAP - United States generally accepted accounting principles.
Hazardous Material - (i) any petroleum or petroleum products,
flammable explosives, radioactive materials, asbestos in any form that is or
could become friable, urea formaldehyde foam insulation and transformers or
other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls (PCBs); (ii) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants" or words of similar import under any Environmental Law; and
(iii) any other chemical or other material or substance, exposure to which is
now or hereafter prohibited, limited or regulated by any Governmental or
Regulatory Authority under any Environmental Law.
Governmental or Regulatory Authority - Any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state,
territory, county, city or other political subdivision.
E-3
<PAGE>
Holding - As defined in the introductory paragraph of this
Agreement.
HSR Act - The Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
Indebtedness - With respect to any person or entity, all
obligations of such person or entity, other than by Holding or any of Holding's
subsidiaries to Holding or any of Holding's subsidiaries, (i) for borrowed
money, (ii) evidenced by notes, bonds, debentures or similar instruments, (iii)
for the deferred purchase price of goods or services (other than trade payables
or accruals incurred in the ordinary course of business), (iv) under capital
leases, and (v) in the nature of guarantees of the obligations described in
clauses (i) through (iv) above of any other person.
Licenses - As defined in Section 7.19.
Liens - Any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.
March 31 Balance Sheet - The unaudited consolidating balance sheet
of CAS prepared in connection with the unaudited balance sheet of Holding as of
March 31, 1998 included in the SEC Filed Materials.
NPL - The National Priorities List under CERCLA.
Order - With respect to any person or entity, any judgment, order,
writ or decree of any court, arbitrator or governmental agency by which such
person or entity or any of its assets or properties is bound.
Plan Affiliate - As defined in Section 7.25(iii).
Purchase Price - As defined in Section 4.1.
Purchaser - As defined in the introductory paragraph of this
Agreement.
Release - Any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.
Regulations - Any laws, statutes, ordinances, regulations, rules,
court decisions and orders of any foreign, federal, state or local government
and any government department or agency including without limitation
environmental laws, energy, motor vehicle and aviation safety, public utility,
zoning, building and health codes, occupational safety and health regulations,
laws relating to employment practices employee documentation, terms and
conditions of employment and wages and hours.
SEC - United States Securities and Exchange Commission.
SEC Filed Material - The following documents filed by Holding with
the SEC: Annual report on Form 10-K for the fiscal year ended June 30, 1997;
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997;
Quarterly Report on Form 10-Q for the quarter ended December 31, 1997; and
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
E-4
<PAGE>
Securities Act - The Securities Act of 1933, as amended.
Tax - Any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not and any expenses incurred in
connection with the determination, settlement or litigation of any Tax
liability.
Tax Return - Any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
1.2. The Explanatory Statement is hereby incorporated into this
Agreement and made a part hereof.
1.3. The section and other headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
1.4. References in this Agreement to the "knowledge" of an entity
shall mean the actual knowledge of the chief executive officer, chief operating
officer, and chief financial officer of such entity, to the extent applicable,
including specifically the president/chief executive officer and chief financial
officer of each of Holding and CAS, and the senior vice president of operations
of CAS, and what they should have known after due and reasonable inquiry.
1.5. Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular, to the singular
include the plural, to the part include the whole, and to the male gender shall
also pertain to the female and neuter genders and vice versa. The term
"including" is not limiting, and the term "or" has the inclusive meaning
represented by the phrase "and/or". The words "hereof", "herein", "hereby",
"hereto", "hereunder" and similar terms in this Agreement refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Section, Schedule, Exhibit and clause references are to this Agreement unless
otherwise specified.
2. Purchase of CAS Assets.
On the terms and subject to the conditions set forth in this
Agreement, CAS hereby agrees to sell, transfer and assign to the Purchaser and
the Purchaser hereby agrees to purchase from CAS, on the Closing Date, all of
the right, title and interest of CAS in and to the CAS Assets. The Purchaser, at
its option, may designate one or more direct or indirect subsidiaries of the
Purchaser to purchase the CAS Assets and to which CAS will sell, transfer and
assign the CAS Assets.
3. Assumption of Liabilities.
The Purchaser will not assume any of the liabilities, contingent
or otherwise, of CAS or Holding for Indebtedness, refunds, payables, litigation,
fines or penalties, employee obligations or otherwise, except for liabilities
arising after the Closing pursuant to the following (the "Assumed Obligations"):
(i) CAS's obligations under the Freight Handling Agreement and the CAS-D Freight
Handling Agreement, and (ii) the leases and other agreements included in the CAS
Assets for which the
E-5
<PAGE>
Purchaser receives the benefit following the Closing, whether by direct
assignment or pursuant to Section 9.11.
4. Consideration.
4.1. The consideration for the CAS Assets (the "Purchase Price")
shall be $27,000,000, paid as follows:
4.1.1. $25,000,000 paid at the Closing by wire transfer of
immediately available funds in accordance with instructions provided by Holding
to the Purchaser.
4.1.2. $2,000,000 (the "Escrow Amount") to be paid at the
Closing by wire transfer of immediately available funds to the Escrow Agent (as
such term is defined in the Escrow Agreement) to be held in accordance with the
terms of the Escrow Agreement for the satisfaction of any claims by the
Purchaser's Indemnities under Section 9.7, or for indemnification pursuant to
Section 15.1 hereof, until the first anniversary of the Closing Date, subject to
the terms of the Escrow Agreement. The respective indemnification obligations of
Holding and CAS hereunder shall not be limited to the Escrow Amount.
4.2. The Purchaser shall be entitled to the benefit of all prepaid
rents, utility bills, license fees and other prepaid expenses of CAS as of the
Closing Date.
4.3. CAS and the Purchaser shall jointly allocate the total
purchase price among the CAS Assets and the parties shall attach such allocation
schedule hereto as Schedule 4.
5. Closing.
5.1. The Closing shall take place at the offices of Gordon,
Feinblatt, Rothman, Hoffberger & Hollander, LLC, 233 East Redwood Street,
Baltimore, Maryland on the Closing Date at 10:00 a.m., local time, or at such
other time and place as shall be agreed upon by the parties hereto.
5.2. Subject to the provisions of Section 9.11, at the Closing (i)
CAS will assign and transfer to the Purchaser all of its right, title and
interest in and to the CAS Assets (free and clear of all Liens), by delivery of
the Bill of Sale, duly executed by CAS, (ii) the Purchaser will assume from CAS
the due payment, performance and discharge of the Assumed Obligations by
delivery of the Assumption Agreement, duly executed by the Purchaser, and the
parties shall deliver the opinions, certificates and other contracts, documents
and instruments required to be delivered by them, respectively, as set forth in
Sections 11 and 12.
5.3. If, prior to the Closing, any of the CAS Assets are destroyed
or damaged or taken in condemnation, the insurance proceeds or condemnation
award with respect thereto shall be a CAS Asset. At the Closing, CAS and Holding
shall pay or credit to the Purchaser any such insurance proceeds or condemnation
awards received by it on or prior to the Closing and shall assign to or assert
for the benefit of the Purchaser all of its rights against any insurance
companies, Governmental or Regulatory Authorities and others with respect to
such damage, destruction or condemnation. As and to the extent that there is
available insurance under policies maintained by CAS and Holding or their
respective affiliates, predecessors and successors in respect of any Assumed
Obligation, except for any such insurance proceeds with respect to which the
insured is directly or indirectly self-insured or has agreed to indemnify the
insurer, CAS and Holding shall cause such insurance to be applied toward the
payment of such Assumed Obligation. The provisions of this Section 5.3 shall not
affect the right of the
E-6
<PAGE>
Purchaser not to close the transactions contemplated by this Agreement if the
condition to its obligations hereunder contained in Section 12.1 has not been
fulfilled.
5.4. Time is of the essence of this Agreement.
6. Accounts Receivable.
6.1. All of CAS's trade receivables for services rendered by CAS
on or before the Closing Date shall be and remain the property of CAS. Provided,
however, that if, prior to the Closing Date, CAS has entered into an agreement
with a customer to provide freight services but such services have not yet been
provided on or before the Closing Date, the Purchaser will assume responsibility
for providing such service (or the remaining portion thereof) and will be
entitled to receive the compensation for such services (or the remaining portion
thereof) performed by the Purchaser, equal to the direct costs relating thereto
(including commissions) paid or incurred by the Purchaser following the Closing
Date, plus a pro-rata share (based on the direct costs to provide such services,
including commissions, incurred or paid by CAS or the Purchaser, respectively)
of the profits with respect thereto. CAS represents that it has not collected,
and undertakes that it will not collect, except as otherwise disclosed in
Schedule 6.1, any pre-payments from any customers, or invoices for any such
services prior to the services having been completed.
6.2. For a period of five months from and after the Closing Date,
and thereafter from month to month until the Purchaser shall give one month's
advance written notice to CAS, the Purchaser shall, as agent of CAS, exercise
its commercially reasonable efforts to diligently collect all receivables owned
by CAS as of the Closing Date. To the extent so collected, the Purchaser shall
pay over and remit bi-weekly (or, if less than $5,000 is so collected on any
bi-weekly period, at such time(s) as such collections aggregate $5,000) to CAS
the cash receipts of such receivables, as collected, together with an accounting
of such amount, showing, for each receivable collected, the payor and invoice
value, the amount of the payment and any other information regularly available
from the accounts receivable system included in the CAS Assets. All such cash
receipts shall be received by, and held in trust by the Purchaser for the
benefit of CAS. The Purchaser shall not resolve any disputed receivables with
any account debtor without the consent of CAS. In the event that any such
dispute is not resolved, the Purchaser, as agent for CAS, shall, at the
discretion of CAS, place such receivable for collection and the cost and the
expenses of collection shall be the exclusive responsibility of CAS.
6.3. As compensation to the Purchaser for the accounts receivable
collection services set forth above, CAS and Holding will collectively pay to
the Purchaser five percent of all proceeds so collected in excess of 90% of the
face value of all such accounts receivable (i.e., face value less reserves and
allowances for doubtful accounts, discounts, uncollectability, etc. consistent
with past practice) on the Closing Date, other than receivables due from Holding
or any of Holding's subsidiaries. For example, if the face value (gross
receivables less allowance for doubtful accounts) of all such accounts
receivable on the Closing Date is $8 million, and the Purchaser collects $7.5
million thereof, CAS will pay to the Purchaser $15,000 (five percent of the
$300,000 collected in excess of $7.2 million (90% of the face amount)). Except
with respect to remitting amounts collected to CAS as set forth in Section 6.2,
the Purchaser shall not be liable for an amount owed on any accounts receivable.
7. Representations and Warranties of CAS and Holding.
CAS and Holding, jointly and severally, represent and warrant to
the Purchaser as follows:
E-7
<PAGE>
7.1. Holding Existence and Good Standing. Holding is a corporation
duly organized, validly existing, and in good standing under the laws of
Delaware has the corporate power and authority to own, lease, and operate its
properties and carry on its business as now being conducted by it, and is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which such qualification is necessary under the applicable
law as a result of the conduct of its business or ownership or leasing of its
properties, and in which failure to be so qualified or in good standing will
have a material adverse effect on its business or properties (owned, leased, or
operated).
7.2. CAS Existence and Good Standing. CAS is a corporation duly
organized, validly existing, and in good standing under the laws of Delaware,
has the corporate power and authority to own, lease, and operate its properties
and carry on its business as now being conducted by it, and is duly qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is necessary under the applicable law
as a result of the conduct of the CAS Business or ownership or leasing of its
properties, and in which failure to be so qualified or in good standing will
have a material adverse effect on its business or properties (owned, leased, or
operated).
7.3. [INTENTIONALLY OMITTED]
7.4. [INTENTIONALLY OMITTED]
7.5. Subsidiaries. CAS has no subsidiaries and does not, directly
or indirectly, own any interest in or control any corporation, partnership,
joint venture or other business association.
7.6. Charter Documents and By-laws. Copies of CAS's and Holding's
(i) Certificate of Incorporation, as amended to date,
certified by its Secretary or Assistant Secretary within 30 days prior to the
date hereof, and
(ii) By-laws, as amended to date, certified by its Secretary
or Assistant Secretary within 30 days prior to the date hereof
are attached hereto as Schedule 7.6 and are complete and correct in all
respects, are in full force and effect, and neither entity is in violation of
any of the provisions of its Certificate of Incorporation or Bylaws.
7.7. Power and Authority; Authorization. Each of CAS and Holding
has full power and authority to enter into, execute and deliver this Agreement,
and to perform its respective obligations hereunder. The execution, delivery,
and performance of this Agreement by CAS and Holding, in accordance with the
terms of this Agreement, have been duly authorized and approved by the Board of
Directors of CAS and the Board of Directors of Holding (as the stockholder of
CAS) and no other approval of CAS, Holding or Holding's stockholders is
required. This Agreement has been, and each of the Exhibits hereto and other
documents required hereunder (if applicable) will be, on the Closing Date, duly
executed and delivered by or on behalf of each of CAS and Holding and are the
legal, valid, and binding obligations of such entity in accordance with their
respective terms, subject (as to the enforcement of remedies) to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and (as
to the availability of equitable remedies) to the discretion of the equity
tribunal having jurisdiction. CAS is a wholly-owned subsidiary of Holding.
7.8. No Violations. The execution, delivery, and performance of
this Agreement by each of CAS and Holding (i) will not violate (with or without
the giving of notice or the lapse of time,
E-8
<PAGE>
or both) or require any registration, qualification, consent, approval, or
filing under any regulation or Order binding on it (other than any required
filings under the HSR Act, and (ii) will not
(a) conflict with, require any consent or approval (other than as set
forth in Section 7.9) under, result (with or without the giving of
notice or the lapse of time or both) in the breach of any provision of,
constitute a default under, result in the acceleration of the
performance of its obligations under, cause or allow for the
termination of, require CAS or Holding to obtain any consent, approval
or action of, or make any filing with or give any notice to any person
as a result or under the terms of, or
(b) result (with or without the giving of notice or the lapse of time
or both) in the creation of any claim or Lien upon CAS, Holding, the
CAS Assets or the CAS Businesses, pursuant to
its certificate of incorporation or by-laws, any debt instrument, mortgage, deed
of trust, license, permit, franchise, lease, contract, or other instrument or
agreement to which such entity or any of its subsidiaries is a party or by which
it is bound (other than such instruments the violation(s) of which can be cured
at an aggregate immaterial cost or expense to such entity and, with or without
being cured, will not prevent such entity from continuing its business in the
ordinary course), or Order.
7.9. Approvals Required. Except for any filing required under the
HSR Act and except as set forth on Schedule 7.9, no approval, authorization,
consent, clearance, order or other action of, or filing (other than notice)
with, any person, firm or corporation, or any court, administrative agency or
other governmental authority, is required by CAS or Holding in connection with
the execution and delivery by it of this Agreement or the performance by it of
the transactions described herein.
7.10. Title to Property and Related Matters. On the date hereof,
CAS has, and on the Closing Date will have, good and marketable title to all of
the CAS Assets (other than assets subject to leases included in Schedule 7.15 or
Schedule 7.19), of any kind or character, free and clear of all Liens, except
those set forth in Schedule 7.10, and all such assets and properties are
reflected on the March 31 Balance Sheet (subject to dispositions or replacements
prior to Closing in the ordinary course of business). Except as set forth in
such Schedules and except for matters that may arise in the ordinary course of
business, CAS's material assets and CAS's use thereof conform in all respects to
all applicable Regulations relating to their construction, use and operation,
and are in good operating condition and repair, reasonable wear and tear
excepted. To the best of the knowledge of CAS and Holding, there does not exist
any condition or agreement that materially interferes with the use thereof in
the conduct of its business in the ordinary course. CAS has no interest in real
property other than as lessee of certain facilities pursuant to leases included
on Schedule 7.15 and in leasehold improvements included in the CAS Assets.
7.11. Licenses; Trademarks; Trade Names. Schedule 7.11 contains a
true and complete list and brief description of all licenses, registered
trademarks, registered trade names, registered service marks, copyrights,
patents or applications for any of the foregoing, and all other proprietary
rights required or used in the CAS Business, other than licenses to use
"off-the-shelf" commercial software included with the equipment that constitute
part of the CAS Assets (none of which licenses are material). Except as listed
on such Schedule and such licenses to use "off-the-shelf" commercial software,
no license, trademark, trade name, service mark, copyright, is required or used
in the CAS Business, and there is no restriction on the transfer thereof.
7.12. [INTENTIONALLY OMITTED]
E-9
<PAGE>
7.13. Financial Statements. The financial statements of CAS
attached hereto as Schedule 7.13 (including the audited financial statements of
CAS for the year ended December 31, 1997) and the financial statements of
Holding included in the SEC Filed Material are (and the financial statements to
be delivered pursuant to Section 9.3, when delivered, will be) accurate and
complete in all material respects and fairly present (and, to the extent
applicable, its predecessor's) financial position of CAS and Holding, as the
case may be, as at the dates set forth therein and the results of its operations
for the periods reflected therein. All such audited financial statements have
been prepared in conformity with GAAP applied on a basis consistent with that of
prior periods (except as specifically indicated on such Schedule), and all such
unaudited financial statements have been prepared in conformity with GAAP
applied on a basis consistent with that of prior periods (except as specifically
indicated on such Schedule), except that such unaudited financial statements do
not contain footnotes and contain reasonable estimates, subject to adjustment,
of accruals, deferrals, and reserves consistent with past practices. Without
limiting the generality of the foregoing, such financial statements do not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make such financial statements not misleading. CAS has always
used the fiscal year ending June 30 as its taxable year. No representation or
warranty is made with respect to financial projections concerning the operations
of CAS which CAS and Holding have previously delivered to the Purchaser. CAS and
Holding have maintained their books and records in a manner sufficient to permit
preparation of financial statements in accordance with GAAP.
7.14. Undisclosed Liabilities. Except as disclosed in the
financial statements referred to in Section 7.13, as of the dates referred to in
such financial statements CAS has no liabilities or obligations of any kind,
whether accrued, absolute, contingent or otherwise, and whether or not required
to be disclosed on a balance sheet prepared in conformity with GAAP, and since
the date of the last such financial statement, CAS has incurred no such
liability or obligation other than (i) as set forth on Schedule 7.14, (ii) in
the ordinary course of business and in amounts consistent with historic business
operations, and (iii) liabilities which, individually or in the aggregate, are
not material to the CAS Business.
7.15. Facilities.
(i) Facilities. CAS does not own any real property. Schedule
7.15 contains a complete and accurate description of the following terms of all
Facility Leases: (a) a general description of the leased property, (b) the term
thereof, (c) the applicable rent, and (d) any requirements for the consent of
third parties to assignments thereof. All Facility Leases are valid, binding and
enforceable in accordance with their terms and, are in full force and effect.
Except as set forth in Schedule 7.15, no event exists which (whether with or
without notice, lapse of time or both or the happening or occurrence of any
other event) would constitute a default thereunder on the part of CAS which
would terminate or cause a material liability under any Facility Leases; and,
there exists no occurrence of any event which (whether with or without notice,
lapse of time or both or the happening or occurrence of any other event) would
constitute a default thereunder by any other party. CAS and Holding have
delivered true and correct copies of the Facility Leases to the Purchaser prior
to the date hereof.
(ii) Actions. There are no pending condemnation proceedings,
administrative proceedings or other actions against CAS with respect to any of
the Facility Leases, or to the knowledge of the Holding or CAS, pending or
threatened condemnation proceedings, administrative proceedings or other actions
with respect to any of the Facility Leases.
(iii) Leases or Other Agreements. Except for Facility Leases
listed in Schedule 7.15, CAS has not entered into any leases, subleases,
licenses, occupancy agreements, options,
E-10
<PAGE>
rights, concessions or other agreements or arrangements written or oral, with
respect to the areas of facilities or real property leased to CAS used in
connection with the CAS Business.
(iv) Facility Leases and Leased Real Property. With respect
to each Facility Lease, CAS enjoys peaceful and undisturbed possession of all
the real property it leases, subject to the rights of the fee owners and the
terms of the Facility Leases, and CAS has performed all the obligations required
to be performed by it though the date hereof.
(v) Certificate of Occupancy. CAS has received all required
approvals of governmental authorities (including permits and a certificate of
occupancy or other similar certificate permitting lawful occupancy by CAS of the
Leased Facilities) required in connection with CAS's operation of the Leased
Facilities.
(vi) Utilities. All of the Leased Facilities are supplied
with utilities (including water, sewage, disposal, electricity and telephone)
and other services necessary for the operation of the Leased Facilities as
currently operated, and, to the knowledge of CAS and Holding, there is no
condition which would result in the termination of any such utility services.
(vii) Improvements, Fixtures and Equipment. None of the
leasehold improvements is subject to any commitment or other arrangement for
their sale or use by an affiliate of Holding or CAS, or any third party that
would materially interfere with the use thereof.
(viii) No Special Assessment. Neither Holding nor CAS has
received notice of any special assessment relating to any of the Leased
Facilities or any portion thereof and, to the knowledge of Holding and CAS,
there is no pending or threatened special assessment with respect thereto.
7.16. CAS Assets. Schedule 1.1 contains an accurate list of each
of the CAS Assets with a current book value in excess of $1,000. Except as
disclosed on Schedule 7.16, the CAS Assets, include all assets necessary for the
conduct of the CAS Business as presently being conducted.
7.17. Material Adverse Change. Except as set forth in Schedule
7.17 or the SEC Filed Material, or as otherwise reflected herein, since March
31, 1998, the CAS Business has been operated in the ordinary course and there
has not been:
(i) Any actual or, to the knowledge of CAS or Holding, any
threatened, material adverse change in the business, condition (financial or
otherwise), results of operations, prospects, properties, assets, liabilities,
earnings, net worth, or prospects thereof, except for the general effects of
present economic conditions or conditions affecting the freight forwarding
industry generally;
(ii) Any material damage, destruction or casualty loss
(whether or not covered by insurance) affecting CAS, the CAS Assets, properties
or business;
(iii) Any statute, rule, regulation or order adopted
(including orders of regulatory authorities with jurisdiction over CAS or its
business) that materially and adversely affects CAS, the CAS Assets or the CAS
Business, other than any statute, rule, regulation or order affecting the
freight forwarding industry in general;
(iv) Any increase in, or commitment to increase, the wage,
salary, commissions, bonus, employee benefit rate or other compensation payable
or to become payable to any of CAS's employees, provided, however, that this
paragraph shall not restrict or limit CAS in any way
E-11
<PAGE>
from hiring additional personnel who are required for its operations in the
usual course of business consistent with past practices;
(v) Any Lien placed on any of the CAS Assets;
(vi) Any sale, assignment, transfer, lease, disposition of,
or agreement to sell, assign, transfer, lease, or dispose of, any of the CAS
Assets, except for dispositions of personal property in the ordinary course of
business;
(vii) Any acquisition or lease by CAS of any assets or
property of any other party except for supplies in the ordinary course of
business and acquisitions of personal property in the ordinary course of
business, and except for the renewal or extension of the Freight Handling
Agreement and the lease of a DC-8 aircraft in connection with CAS's service to
and from Indianapolis, Indiana;
(viii) Any collective bargaining agreement or commitment by
CAS or any liability incurred by CAS to any labor organization or other material
change in employee relations;
(ix) Any capital expenditure by CAS in excess of $100,000 or
outside the ordinary course of business;
(x) Any change by CAS in the nature of its business or its
methods, principles or practices of accounting;
(xi) To the knowledge of CAS or Holding, the loss by CAS of
any supplier(s), vendor(s), customer(s) or employee(s), which loss (individually
or in the aggregate) has had or is reasonably expected to have a material
adverse effect on CAS's financial condition, results of operation, business or
prospects;
(xii) (a) Other than with respect to existing credit
facilities (without amendment or modification thereto), any Indebtedness
incurred by CAS with respect to the conduct of the CAS Business in an aggregate
principal amount exceeding $1,000,000 (net of any amounts discharged during such
period), or (b) any voluntary purchase, cancellation, prepayment or complete or
partial discharge in advance of a scheduled payment date with respect to, or
waiver of any right of CAS under, any Indebtedness of or owing to CAS with
respect to the conduct of the CAS Business.
(xiii) Any declaration or payment of any dividend in respect
of the capital stock of CAS, or other payment to the stockholders of CAS in
their capacity as such.
(xiv) Any entering into, any amendment, modification,
termination (partial or complete) or granting of a waiver under or giving any
consent with respect to (a) any Contract which is required (or had it been in
effect on the date hereof would have been required) to be disclosed pursuant to
Section 7.19 or (b) any License included on Schedule 7.19.
(xv) Any other events or conditions of any character
specifically related to the business or operations of CAS that may reasonably be
expected to have a material adverse effect on CAS or its business or financial
condition, except for the general effects of present economic conditions;
(xvi) Any agreements or commitments to do any of the
foregoing.
E-12
<PAGE>
7.18. Tax Matters.
(a) CAS and Holding have filed (or will timely file) all Tax
Returns required to be filed by applicable law with respect to the CAS Business
or CAS's earnings and assets for periods ending on or prior to the Closing Date.
All such Tax Returns were (and, as to Tax Returns not filed as of the date
hereof, will be) true, complete and correct and filed on a timely basis. CAS and
Holding have paid all Taxes that are due, or claimed or asserted by any taxing
authority to be due from Holding and CAS for the periods covered by the Tax
Returns filed by CAS or Holding. CAS and Holding have established (and until the
Closing Date will maintain) on their books and records reserves adequate to pay
all Taxes not yet due and payable in respect of operations and transactions
through the Closing Date. There are no Tax Liens upon the assets of CAS except
Liens for Taxes not yet due. Holding and CAS have complied (and until the
Closing Date will comply) with all applicable laws, rules, and regulations
relating to the payment and withholding of Taxes (including withholding and
reporting requirements under Code ss.ss.1441 through 1464, 3401 through 3406,
6041 and 6049 and similar provisions under any other laws) and have, within the
time and in the manner prescribed by law, withheld from employee wages and paid
over to the proper Governmental and Regulatory Authorities all required amounts.
No audits or other administrative proceedings or court proceedings are presently
pending with regard to any Taxes or Tax Returns of Holding or CAS that relate to
the CAS Business, or CAS's earnings or assets. Holding and CAS have made
available (or, in the case of Tax Returns to be filed on or before the Closing
Date, will make available) to the Purchaser complete and accurate copies of all
Tax Returns filed by or on behalf of CAS for all taxable years ending on or
prior to the Closing Date with respect to the CAS Business, or CAS's earnings
and assets.
7.19. Agreements and Authorizations. Schedule 7.19 contains a true
and complete list and brief description of all written or oral contracts,
agreements, mortgages, obligations, understandings, arrangements, restrictions,
and other instruments ("Contracts") to which CAS is a party or by which CAS or
its assets may be bound involving required payments in any consecutive 12-month
period or otherwise representing required annualized costs to CAS of $50,000 or
more or representing required aggregate payments by CAS of $50,000 over the term
of any such agreement or arrangement (without regard to the amount of annualized
payments or costs). Schedule 7.19 also contains a true and complete list and
brief description of all governmental licenses, permits, authorizations and
material non-governmental licenses, franchises and agency arrangements necessary
to operate the CAS Business as heretofore operated ("Licenses"). True and
correct copies of all items set forth on such Schedule have been made available
to the Purchaser. Except as disclosed on such Schedule, each such Contract and
License is valid, binding in full force and effect. No event has occurred which
would constitute (whether with or without notice, lapse of time or the happening
or occurrence of any other event) a material default by CAS under any of the
Contracts or Licenses set forth in such Schedule. CAS is not aware of any
material default by the other parties to such Contracts or Licenses.
7.20. Compliance; Governmental Authorizations. Except as set forth
on Schedule 7.20: (i) CAS has heretofore complied with and is in compliance with
all Regulations which, if not complied with, would materially and adversely
affect its business; (ii) CAS has all federal, state, local and foreign
governmental licenses and permits necessary for the conduct of its business; and
(iii) such licenses and permits are in full force and effect. Neither CAS nor
Holding knows of any violations of any such licenses or permits. No proceedings
are pending or, to CAS's or Holding's knowledge, threatened to revoke or limit
the use of such licenses or permits.
7.21. Litigation. Except as set forth in Schedule 7.21, there are
no actions, suits, claims, or legal, administrative or arbitration proceedings,
or to the knowledge of CAS or Holding, investigations, against Holding or CAS
with respect to the CAS Assets or the CAS Business whether at
E-13
<PAGE>
law or in equity, or before or by any federal, state, municipal, local, foreign
courts, tribunals, arbitrations or other governmental department, commission,
board, bureau, agency or instrumentality, which (i) could reasonably be expected
to result in the issuance of an Order restraining, enjoining or otherwise
prohibiting or making illegal the closing of any of the transactions
contemplated by this Agreement or otherwise result in a material diminution of
the benefits contemplated by this Agreement to the Purchaser, or (ii) if
determined adversely to CAS or Holding, as applicable, could reasonably be
expected to result in (a) any injunction or other equitable relief that would
interfere with the CAS Business or (b) individually or in the aggregate in
respect of other such actions or proceedings, damages, fines, fees, penalties
and other costs by CAS exceeding $50,000. Neither CAS nor Holding know of a
threat of, or any fact, circumstances or other basis for, any such action, suit,
claim, investigation or proceeding. Except as set forth in Schedule 7.21, CAS is
not in default with respect to or subject to any Order and there are no
unsatisfied judgements against CAS or the CAS Assets. To the knowledge of CAS
and Holding, there is no reasonable likelihood of a determination adverse to CAS
in any pending actions, suits, claims, investigations or legal, administrative
or arbitration proceedings.
7.22. Insurance. Attached hereto as Schedule 7.22 is a list of all
insurance policies of CAS setting forth the name of the insurer, a description
of the policy, the amount of coverage, the amount of the premium and the
expiration date of the policy. All of CAS's insurable properties and assets are
insured with reputable and financially sound insurers, and have been
consistently insured for the prior five years (or such shorter period as CAS
owned such property), for CAS's benefit, under such policies of fire, casualty,
and other insurance as are customarily obtained to cover comparable properties
and assets by businesses in the region in which such properties and assets are
located, in amounts, scope and coverage which are adequate and reasonable in
light of existing conditions. Each insurance policy relating to the insurance
referred to in this Section is valid and enforceable. CAS has not failed to give
any notice or to present any claim under any insurance policy in a due and
timely fashion, nor has it permitted a lapse in any of its insurance policies at
any time during the prior five years.
7.23. Bankruptcy. Neither CAS nor Holding has any knowledge or
expectation that any petition for relief will be filed by CAS or Holding or any
case commenced against either of them under the Bankruptcy Code or any similar
federal or state statute, and neither CAS nor Holding has applied for or
consented to the appointment of, or taking of possession by, a receiver,
custodian, trustee or liquidator of itself or any of their respective properties
or made a general assignment for the benefit of creditors. Neither CAS nor
Holding is in default under or in breach of any loan agreement, credit facility,
note, lease, or other financing agreement, which will remain outstanding
following the Closing.
7.24. Employees. Neither CAS nor any of its employees is subject
to any labor agreement or collective bargaining agreement, no petition for
certification or union election is pending with respect to the employees of CAS,
to the knowledge of CAS or Holding, no union or collective bargaining
representative has sought such certification or recognition with respect to the
employees of CAS at any time during the past three years, and, to the knowledge
of CAS or Holding, there has been no agreement or commitment to do or enter into
any of the foregoing. Except as set forth on Schedule 7.24, CAS has not entered
into any written or oral employment agreement or become obligated under any
other document, policy or practice which gives to any person a right to
employment or compensation, including severance payments. Schedule 7.24 also
includes accurate and complete copies of all written and detailed descriptions
of all oral employment arrangements disclosed on such Schedule. To the knowledge
of CAS and Holding, all of CAS's employees are authorized by the United States
Department of Justice to work in the United States, and CAS has complied with
all verification requirements of the United States Department of Justice with
respect to the identity of all of CAS's employees and their authorization to
work in the United States. CAS is neither in breach of, nor has taken any action
which would constitute a breach of, any oral or written agreements or
understandings respecting employment.
E-14
<PAGE>
All obligations of CAS, whether arising by operation of law, by contract, by
past custom or practice or otherwise, for salaries, vacation, holiday pay,
bonuses and other forms of compensation which were payable to its officers,
directors or employees as of the date hereof (including all required and due
taxes, insurance and withholding thereon) have been paid as of the date hereof.
There is no labor strike or labor disturbances pending or threatened against CAS
nor is any grievance currently being asserted. CAS is not and has not engaged in
any unfair labor practice. There is no unfair labor practice charge or complaint
against CAS pending before the National Labor Relations Board or any other
domestic or foreign governmental agency and, to the knowledge of CAS or Holding,
there are no facts or information that could give rise thereto. CAS's
relationship with its employees is good, and neither CAS nor Holding has
received any information which would lead it to believe that a material number
of CAS's employees will or may cease to be employees of CAS prior to the Closing
or will refuse reasonable offers to be employed by the Purchaser following the
Closing.
7.25. Employee Benefit Plans.
(i) Except as set forth on Schedule 7.25, CAS does not
sponsor nor is it a party to (a) any employee benefit plan (as defined in
Section 3(3) of ERISA), (b) any employee welfare benefit plan (as defined in
Section 3(1) of ERISA), (c) any employment contract, written or unwritten or,
(d) any other bonus, incentive compensation, deferred compensation, pension,
profit sharing, stock purchase, stock option, stock appreciation, phantom stock,
leave of absence, layoff, vacation, day or dependent care, legal services,
cafeteria, life, health, disability, worker compensation, severance or other
employee benefit plan, practice, policy or arrangement of any kind, whether
written or oral. All such employee benefit plans, employee welfare plans,
arrangements and employment contracts which CAS does sponsor or is a party to
are hereafter collectively referred to as "Employee Benefit Plans." CAS has not
scheduled or agreed upon future increases of benefit levels (or the creation of
new benefits) with respect to any Employee Benefit Plan, and no such increases
or benefits have been proposed or made the subject of representations to CAS
employees under circumstances which make it reasonable to expect that such
increases or benefits will be granted.
(ii) With respect to each Employee Benefit Plan, CAS has
delivered to Purchaser correct and complete copies, including amendments, of the
following (to the extent applicable): (i) the current and most recent prior
Employee Benefit Plan and contract documents, (including any related trust
agreements, service provider agreements, insurance contracts, or agreements with
investment managers), (ii) the current and most recent prior Summary Plan
Descriptions or similar descriptions of Employee Benefit Plans not subject to
ERISA, (iii) the two most recently filed Form 5500s and schedules thereto, (iv)
the two most recent IRS determination letters, (v) the two most recent
allocation or actuarial reports and (vi) any employee handbook(s) which refer to
such Employee Benefit Plan.
(iii) The assets of CAS are not subject to any Liens under
ERISA or the Internal Revenue Code, and no event has occurred, and no condition
exists, which would subject CAS or its assets to a future liability or Lien on
account of any Controlled Group Benefit Plan. A Controlled Group Benefit Plan
means any Employee Benefit Plan which CAS or any entity which must be considered
together with CAS under Internal Revenue Code Section 414(b), (c), (m) or (o) (a
"Plan Affiliate"), now maintains or contributes to or ever maintained or
contributed to.
(iv) No Employee Benefit Plan is or at any time was subject
to Title IV of ERISA, nor has CAS ever sponsored or contributed to any plan that
at any time was subject to Title IV of ERISA. No event has occurred and there
exists no condition or circumstances in connection with any Employee Benefit
Plan or any Controlled Group Benefit Plan under which CAS or any Plan Affiliate,
directly or indirectly (through any indemnification agreement or otherwise),
could reasonably be expected
E-15
<PAGE>
to be subject to any risk of material liability under Section 409 of ERISA,
Section 502(i) of ERISA, Title IV of ERISA or Section 4975 of the Code.
(v) Each Employee Benefit Plan is, and has at all times been,
administered and operated in material compliance with its terms and the Internal
Revenue Code, ERISA and all other applicable laws, regulations, orders and
prohibited transactions exemptions. Each Employee Benefit Plan which CAS
currently sponsors or contributes to can be amended or terminated at any time
without liability to CAS.
(vi) CAS has performed all obligations required to be
performed by it with respect to each Employee Benefit Plan under any law or by
the terms of each such Plan. All contributions and other payments required to be
made by CAS to any Employee Benefit Plan with respect to any period ending
before or at or including the Closing Date have been made or reserves adequate
for such contributions or payments have been or will be set aside therefore and
have been or will be reflected in financial statements of CAS in accordance with
GAAP. There are no material outstanding liabilities of any Employee Benefit Plan
(other than routine benefit claims made in the ordinary course).
(vii) There are no actions, investigations or claims of any
kind (other than routine benefit claims made in the ordinary course), pending or
threatened, with respect to any Employee Benefit Plan. There have been no audits
or investigations of any Employee Benefit Plan by any governmental agency except
as set forth on Schedule 7.25. There are no pending or threatened claims by or
on behalf of any Employee Benefit Plan, by any person covered thereby, or
otherwise, which allege violations of law and which could reasonably be expected
to result in liability on the part of the Purchaser.
(viii) Each Employee Benefit Plan that is intended to
constitute a qualified plan under Internal Revenue Code Section 401(a) is, and
has at all times been, qualified in form and operation under Section 401(a) and
is the subject of a favorable determination letter from the IRS.
(ix) Except as required by ERISA Sections 601-608, no
Employee Benefit Plan provides health, medical or similar benefits to retirees
or other former employees or their beneficiaries.
(x) The closing of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee of CAS to
severance pay or any other payment (including parachute payments) from CAS,
except as expressly provided in this Agreement, or (ii) accelerate the time of
payment or vesting or funding or increase the amount of compensation due any
such employee except as expressly provided in this Agreement.
(xi) Except as set forth on Schedule 7.25, no loan is
outstanding between CAS and any employee of CAS. No employer securities,
employer real property or other employer property is included in the assets of
any Employee Benefit Plan.
(xii) Each Employee Benefit Plan covers only employees (or
former employees or beneficiaries) of CAS, so that the transactions contemplated
by this Agreement will require no spin-off of assets and liabilities or other
division or transfer of rights with respect to any such plan.
(xiii) All categories of earned and unpaid bonuses or other
similar payments to employees of CAS pursuant to the Employee Benefit Plans, and
the date on which such bonuses are due or scheduled to be paid, are set forth on
Schedule 7.25, and CAS has made adequate reserve and has sufficient cash
resources for payment of such bonuses as and when they become due.
E-16
<PAGE>
7.26. Environmental.
7.26.1. CAS has operated its business and maintained its
assets (owned or leased) in compliance with all applicable environmental laws
and regulations in all material respects, and no order has been issued, claim
made or threatened in respect of any environmental matter. All environmental
reports directed to or obtained by CAS relating to the CAS Business have been
disclosed to the Purchaser.
7.26.2. CAS has obtained all licenses which are required
under applicable Environmental Laws in connection with the conduct of the
business or the CAS Assets. Each of such licenses is in full force and effect.
CAS has conducted the business in compliance in all material respects with the
terms and conditions of all such licenses and with any applicable Environmental
Law. In addition, except as set forth in Schedule 7.26:
(i) No order has been issued, no Environmental Claim has been
filed, no penalty has been assessed and no investigation or review is pending
or, to the knowledge of CAS or Holding, threatened by any Governmental or
Regulatory Authority with respect to any alleged failure by CAS to have any
license required under applicable Environmental Laws in connection with the
conduct of the business or with respect to any generation, treatment, storage,
recycling, transportation, discharge, disposal or Release of any Hazardous
Material in connection with the business, and to the knowledge of CAS and
Holding there are no facts or circumstances in existence which could reasonably
be expected to form the basis for any such order, Environmental Claim, penalty
or investigation.
(ii) CAS does not own, operate or lease a treatment, storage
or disposal facility on any of the real property occupied by CAS requiring a
permit under the Resource Conservation and Recovery Act, as amended, or under
any other comparable state or local law; and, without limiting the foregoing,
(a) no polychlorinated biphenyl is present, (b) no asbestos or
asbestos-containing material is present, (c) there are no underground storage
tanks or surface impoundments for Hazardous Materials, active or abandoned, and
(d) no Hazardous Material has been Released in a quantity reportable under, or
in violation of, any Environmental Law or otherwise Released, in the cases of
clauses (a) through (d), at, on or under any such real property during any
period that CAS owned, operated or leased such property.
(iii) No Hazardous Material generated in connection with the
operation of the business has been recycled, treated, stored, disposed of or
Released by CAS at any location.
(iv) No oral or written notification of a Release of a
Hazardous Material in connection with the operation of the business has been
filed by or on behalf of CAS, and no site or facility now or previously owned,
operated or leased by CAS on any of the real property is listed or proposed for
listing on the NPL, CERCLIS or any similar state or local list of sites
requiring investigation or clean-up.
(v) No Liens have arisen under or pursuant to any
Environmental Law on any site or facility owned, operated or leased by CAS on
any of the real property, and no federal, state or local Governmental or
Regulatory Authority action has been taken or, to the knowledge of CAS or
Holding, is in process that could subject any such site or facility to such
Liens, and CAS would not be required to place any notice or restriction relating
to the presence of Hazardous Materials at any such site or facility in any deed
to the real property on which such site or facility is located.
E-17
<PAGE>
(vi) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by, or that are in
the possession of, CAS in relation to any site or facility now or previously
owned, operated or leased by CAS on any of the real property which have not been
delivered to the Purchaser prior to the execution of this Agreement.
7.27. Business Relationships. Except as set forth on Schedule
7.17, to the knowledge of CAS and Holding, CAS's relationships with its
suppliers, vendors, representatives and customers is satisfactory, and to the
knowledge of CAS and Holding, there is no occurrence which, with or without the
giving of notice or the lapse of time or both, would constitute a default under
any agreement or arrangement with any such party or would adversely affect CAS's
relationship with any such party so as to have a material adverse effect on the
business, operations, or condition (financial or otherwise) of CAS, and since
March 31, 1998, there have been no material adverse changes in pricing or
material adverse changes in volume of business in the aggregate.
7.28. Knowledge of Adverse Conditions. To the knowledge of CAS and
Holding, there are no present or future conditions, state of facts or
circumstances which has affected or may in the aggregate have a material adverse
effect upon the business or prospects of CAS taken as a whole, except for the
general effects of present economic conditions or conditions affecting the
freight forwarding industry generally.
7.29. Affiliate Transactions. Except as disclosed on Schedule
7.29, (i) neither Holding nor any officer, director or Affiliate of CAS or
Holding provides, directly or indirectly, any assets, services or facilities
used or held for use in connection with the CAS Business, and (ii) the CAS
Business does not provide, directly or indirectly, any assets, services or
facilities to Holding or any such officer, director or Affiliate. Except as
disclosed on Schedule 7.29, each of the transactions listed on such Schedule is
engaged in on an arm's-length basis.
7.30. Accuracy of Representations. All representations and
warranties with respect to CAS and Holding are true and correct as of the date
hereof. This Agreement does not contain, and no statement contained in the
Schedules or in any certificate, list or writing furnished by or on behalf of
CAS or Holding to the Purchaser pursuant to any provision of this Agreement
contains, any untrue statement of a material fact with respect to CAS or Holding
or omit to state any material fact with respect to CAS or Holding necessary to
make the statements contained herein not misleading. All matters and facts known
to CAS or Holding that are material to the CAS Assets and CAS Business (other
than the general effects of present economic conditions or conditions affecting
the freight forwarding industry generally) have been disclosed to the Purchaser.
8. Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to Holding as follows:
8.1. Existence and Good Standing. The Purchaser is a corporation
duly organized, validly existing, and in good standing under the laws of
Delaware, and has the corporate power and authority to own, lease, and operate
its properties and carry on its business as now being conducted by it.
8.2. Power and Authority; Authorization. The Purchaser has full
power and authority to enter into, execute and deliver this Agreement, and to
perform each of its obligations hereunder. The execution, delivery, and
performance of this Agreement by the Purchaser, in accordance with the terms of
this Agreement, have been duly authorized and approved by the board of directors
of
E-18
<PAGE>
the Purchaser and no other approval of the Purchaser or its stockholders is
required. This Agreement has been, and each of the Exhibits hereto and other
documents required hereunder (if applicable) will be, on the Closing Date, duly
executed and delivered by or on behalf of the Purchaser and are the legal,
valid, and binding obligations of the Purchaser in accordance with their
respective terms, subject (as to the enforcement of remedies) to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and (as
to the availability of equitable remedies) to the discretion of the equity
tribunal having jurisdiction.
8.3. No Violations. The execution, delivery, and performance of
this Agreement by the Purchaser (i) will not violate (with or without the giving
of notice or the lapse of time, or both) or require any registration,
qualification, consent, approval, or filing under (except as set forth in
Section 8.4), any law, ordinance or regulation binding on it (other than any
required filings under the HSR Act and (ii) will not
(a) conflict with, require any consent or approval under, result in the
breach of any provision of, constitute a default under, result in the
acceleration of the performance of its obligations under, cause or
allow for the termination of, or
(b) result in the creation of any claim or Lien upon any of its
properties, assets, or businesses, pursuant to
its certificate of incorporation or by-laws, any debt instrument, mortgage, deed
of trust, license, permit, franchise, lease, contract, or other instrument or
agreement to which the Purchaser is a party or by which it is bound (other than
such instruments the violation(s) of which can be cured at an aggregate
immaterial cost or expense to such entity and, with or without being cured, will
not prevent such entity from continuing its business in the ordinary course), or
any judgment, order, writ or decree of any court, arbitrator or governmental
agency by which the Purchaser or any of its assets or properties is bound.
8.4. Approvals Required. Except for any filing required under the
HSR Act, and as set forth on Schedule 8.4, no approval, authorization, consent,
clearance, order or other action of, or filing with, any person, firm or
corporation, or any court, administrative agency or other governmental
authority, or any governmental or non-governmental trade group, is required by
the Purchaser in connection with the execution and delivery by the Purchaser of
this Agreement or the performance by the Purchaser of the transactions described
herein.
8.5. Accuracy of Representations. All representations and
warranties set forth herein with respect to the Purchaser are true and correct
as of the date hereof. This Agreement does not contain any untrue statement of a
material fact with respect to the Purchaser or omit to state any material fact
with respect to the Purchaser necessary to make the statements contained herein
not misleading.
9. Covenants of CAS and Holding.
CAS and Holding each covenants and agrees as follows:
9.1. Prior to the Closing, it will hold in strict confidence and
not disclose to others (except its professional advisors and lenders), and will
not use or permit others to use, any data or information obtained from the
Purchaser concerning the Purchaser or its business, except as required by law
and except to the extent such information can be obtained from public or
published information or trade sources. If the transactions contemplated by this
Agreement are not concluded, it will (i) return to the Purchaser all such data
or information then held by it or its representatives and will continue to
E-19
<PAGE>
maintain such information in strict confidence as set forth above, and (ii)
except as required by law or as otherwise provided herein, not disclose to any
other party (except its professional advisors and lenders who have a "need to
know"), the existence of this Agreement or any letters of intent with respect
thereto. It will maintain all negotiations and other information with respect to
the transactions contemplated herein in confidence and, except as required by
law or as required to comply with federal securities laws, will not make any
announcement thereof or disclose such negotiations to any other party other than
its professional advisors and lenders. Concurrent with the execution hereof, the
parties shall issue the respective announcements attached hereto as Exhibit D.
If CAS or Holding is advised by its outside legal counsel that it is required by
law or by the rules and regulations of the SEC to make any further disclosure,
it will first advise the Purchaser of the content of the proposed disclosure,
and the time and place that the disclosure will be made, and the parties will
endeavor to make such disclosure jointly. This covenant shall survive
termination of this Agreement.
9.2. Prior to the Closing Date, CAS will not engage in any
practice, take or omit to take any action, or enter into any transaction outside
the ordinary course of business. Without limiting the generality of the
foregoing, Holding and CAS will:
(i) Use commercially reasonable efforts to (a) preserve intact the
present business organization and reputation of the CAS Business, (b) keep
available (subject to dismissals and retirements in the ordinary course of
business consistent with past practice) the services of the CAS employees, (c)
maintain the CAS Assets in good working order and condition, ordinary wear and
tear excepted, and (d) maintain the good will of customers, suppliers, lenders
and other persons to whom CAS sells goods or provides services or with whom CAS
otherwise has significant business relationships in connection with the CAS
Business.
(ii) Except to the extent required by applicable law, (a) cause
the CAS Business books and records to be maintained in the usual, regular and
ordinary manner, and (b) except in the ordinary course of business, not permit
any material change in any pricing, investment, accounting, financial reporting,
inventory, credit, allowance or tax practice or policy of CAS that would
adversely affect the CAS Business, the CAS Assets or the Assumed Obligations.
Nothing contained herein shall require CAS or Holding to disclose to the
Purchaser, or allow the Purchaser to have access to, any customer pricing
information of CAS.
9.3. Financial Statements and Reports; Filings.
(i) As promptly as practicable and in any event no later than 45
days after the end of each fiscal quarter ending after the date hereof and
before the Closing Date (other than the fourth quarter), 90 days after the end
of each fiscal year ending after the date hereof and before the Closing Date, or
30 days after the end of each calendar month ending after the date hereof and
before the Closing Date, as the case may be, CAS will deliver to the Purchaser
true and complete copies of the unaudited balance sheet, and the related
unaudited statement of operations, of the CAS Business, as of and for the fiscal
year then ended or as of and for the fiscal quarter or month and the portion of
the fiscal year then ended, as the case may be, together with the notes, if any,
relating thereto, which quarterly and annual financial statements shall be
prepared in accordance with GAAP on a basis consistent with the prior financial
statements of CAS. Monthly financial statements will be preliminary and may not
be in accordance with GAAP.
(ii) As promptly as practicable, CAS will deliver to Purchaser
true and complete copies of such other financial statements, reports and
analyses relating to the CAS Business as may be prepared or received by CAS or
as Purchaser may otherwise reasonably request.
E-20
<PAGE>
(iii) As promptly as practicable, CAS will deliver copies of all
license applications and other filings made by CAS in connection with the
operation of the CAS Business after the date hereof and before the Closing Date
with any Governmental or Regulatory Authority (other than routine, recurring
filings made in the ordinary course of business consistent with past practice).
9.4. Employee Matters. Except as may be required by law, prior to
the Closing Holding and CAS will refrain from directly or indirectly:
(i) Making any representation or promise, oral or written, to any
CAS employee concerning any benefit plan, except for statements as to the rights
or accrued benefits of any CAS employee under the terms of any benefit plan.
(ii) Except as required by an employment agreement set forth on
Schedule 7.24 or in conjunction with promotions of employees in the ordinary
course of business, making any increase in the salary, wages or other
compensation in excess of 5% of any CAS employee's salary or outside of the
ordinary course of business consistent with past practice, or any increase in
the salary, wages or other compensation of any CAS employee whose annual salary
is or, after giving effect to such change, would be $50,000 or more.
(iii) Except as required by an employment agreement set forth on
Schedule 7.24 or as set forth on Schedule 7.25, adopting, entering into or
becoming bound by any benefit plan, employment-related contract or agreement or
collective bargaining agreement with respect to the CAS Business or any of the
CAS employees, or amending, modifying or terminating (partially or completely)
any such benefit plan, employment-related contract or agreement or collective
bargaining agreement, except to the extent required by applicable law and, in
the event compliance with legal requirements presents options, only to the
extent that the option which CAS reasonably believes to be the least costly is
chosen.
(iv) Except as required by an employment agreement set forth on
Schedule 7.24 or as set forth on Schedule 7.25, establishing or modifying any
(i) targets, goals, pools or similar provisions in respect of any fiscal year
under any benefit plan or any employment-related contract or other compensation
arrangement with or for CAS employees, or (ii) salary ranges, increase
guidelines or similar provisions in respect of any benefit plan or any
employment-related contract or other compensation arrangement with or for CAS
employees.
(v) Discouraging any employee of the CAS Business from remaining
with the CAS Business.
9.5. Prior to the Closing Date, it will continue to operate the
CAS Business in the ordinary course of business, and will preserve, and enforce,
in the ordinary course of business, all rights with respect thereto, including
its present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers and employees.
9.6. Holding and CAS will: (i) on the date hereof, make all
filings under the HSR Act with respect to the transactions contemplated hereby
(the filing fee with respect thereto to be paid by the Purchaser); (ii) use all
commercially reasonable efforts to cooperate with the Purchaser in (a)
determining which other filings are required to be made prior to the Closing
Date with, and which other consents, approvals, permits or authorizations are
required to be obtained prior to the Closing Date from, Governmental or
Regulatory Authorities in connection with the execution and delivery of this
Agreement and the closing of the transactions contemplated hereby, and (b)
timely making all such filings and timely
E-21
<PAGE>
seeking all such consents, approvals, permits or authorizations; (iii) promptly
seek all such consents, approvals, permits or authorizations necessary to assign
or transfer any Contracts which constitute CAS Assets in accordance herewith;
and (iv) use all commercially reasonable efforts to take, or cause to be taken,
all other action and do, or cause to be done, all other things necessary, proper
or appropriate to close the transactions contemplated by this Agreement. Holding
and CAS will provide prompt notification to the Purchaser when any such consent,
approval, action, filing or notice referred to in the first sentence of this
Section 9.6 is obtained, taken, made or given, as applicable, and will advise
the Purchaser of any communications (and, unless precluded by law, provide
copies of any such communications that are in writing) with any Governmental or
Regulatory Authority or other person regarding any of the transactions
contemplated by this Agreement. Holding and CAS will take all commercially
reasonable actions necessary or appropriate to cause the prompt expiration or
termination of any applicable waiting period under the HSR Act in respect of the
transactions contemplated hereby, including complying as promptly as practicable
with any requests for additional information and assisting the Purchaser in
responding to any such requests for additional information. All out-of-pocket
third-party costs and expenses (i.e., but not office or employee overhead
expenses) of Holding and CAS in connection with complying with such requests for
additional information and assistance to the Purchaser in responding to such
requests for additional information shall be subject to the prior approval of
and supervision by the Purchaser and shall be paid by the Purchaser or, if paid
by Holding or CAS, reimbursed by the Purchaser to Holding or CAS, as the case
may be.
9.7. Subject to the provisions of Section 10.5, Holding and CAS
jointly and severally undertake to (i) pay all trade liabilities of CAS in
accordance with their terms, and (ii) pay, within 15 days following the Closing
Date or earlier if required by law or pursuant to any applicable Employee
Benefit Plan of CAS, all employee bonus and other compensation arrangements and
obligations incurred by CAS prior to the Closing in accordance with CAS's
Employee Benefit Plans; provided, however, that to the extent any CAS employee
who is hired by the Purchaser (or a subsidiary or Affiliate of the Purchaser)
following the Closing elects to retain vacation time accrued while employed by
CAS, CAS will pay to the Purchaser the dollar value of such accrued vacation
time in accordance with the terms of CAS's Employee Benefit Plans. If, in the
reasonable judgement of the Purchaser, the failure to pay any such liability has
or may have an adverse impact on the CAS Business after the Closing Date, then,
following five days' advance written notice to CAS during which five-day period
CAS does not certify to the Purchaser that such liability is legitimately in
dispute, the Purchaser may pay such liability and recover the amount so paid
from CAS and Holding or by offsetting amounts payable to CAS or Holding pursuant
to Section 6.2 hereof.
9.8. CAS and Holding will (a) provide the Purchaser and any person
who is considering providing financing to the Purchaser to finance all or any
portion of the purchase price (it being understood that the transactions
contemplated by this Agreement are not contingent on the Purchaser obtaining any
form of financing) and their respective officers, directors, employees, agents,
counsel, accountants, financial advisors, consultants and other representatives
(collectively, "Representatives") with full access, upon reasonable prior notice
and during normal business hours, to the employees and such other officers,
employees and agents of CAS and Holding who have any responsibility for the
conduct of the CAS Business, to CAS's and Holding's accountants and to the CAS
Assets, and (b) furnish the Purchaser and such other persons with all such
information and data (including without limitation copies of Contracts,
Licenses, Employee Benefit Plans and other CAS Business books and records)
concerning the CAS Business, the CAS Assets and the Assumed Obligations as the
Purchaser or any of such other persons reasonably may request in connection with
such investigation. Nothing contained herein shall require CAS or Holding to
disclose to the Purchaser prior to the Closing, or allow the Purchaser to have
access to prior to the Closing, any customer pricing information of CAS.
E-22
<PAGE>
9.9. Prior to the Closing, Holding will, and will cause its
subsidiaries to, transfer to CAS all of their respective right, title and
interest in and to the assets described on Schedule 7.16.
9.10. If, following the Closing, any customer of CAS claims a
refund of amounts previously paid to CAS for services performed prior to the
Closing, CAS and Holding undertake to deal with such customer(s) in good faith
and to exercise commercially reasonable best efforts to satisfy such
customer(s).
9.11. Notwithstanding anything herein to the contrary, the parties
hereto acknowledge and agree that at the Closing CAS will not assign to the
Purchaser any contract, agreement or other right which by its terms requires the
consent of any other party unless such consent has been obtained prior to the
Closing. With respect to each such unassigned contract, agreement or right,
after the Closing CAS shall continue as the prime contracting party and, if
requested by Purchaser shall use its reasonable efforts to obtain the consent of
all required parties to the assignment of such contract, agreement or right, but
the Purchaser shall be entitled to the benefits of such contract, agreement or
right accruing after the Closing to the extent that CAS may provide to the
Purchaser with such benefits without violating the terms of such contract,
agreement or right.
10. Covenants of the Purchaser.
The Purchaser covenants and agrees as follows:
10.1. Prior to the Closing, it will hold in strict confidence and
not disclose to others (except to rating agencies, its professional advisors and
lenders, and as necessary in connection with its 144A or other form of
financing, it being understood that the transactions contemplated by this
Agreement are not contingent on the Purchaser obtaining any form of financing),
and will not use or permit others to use, any data or information obtained from
the Amertranz Group concerning the Amertranz Group or its business, except as
required by law and except to the extent such information can be obtained from
public or published information or trade sources. If the transactions
contemplated by this Agreement are not concluded, it will (i) return to the
Amertranz Group all such data or information then held by it or its
representatives and will continue to maintain such information in strict
confidence as set forth above, and (ii) except as required by law or as
otherwise provided herein, not disclose to any other party (except its
professional advisors and lenders who have a "need to know"), the existence of
this Agreement or any letters of intent with respect thereto. It will maintain
all negotiations and other information with respect to the transactions
contemplated herein in confidence and, except as required by law or by the rules
and regulations of the SEC or with the consent of the Amertranz Group, whose
consent shall not be unreasonably withheld, will not make any announcement
thereof or disclose such negotiations to any other party other than its
professional advisors and lenders. Concurrent with the execution hereof, the
parties shall issue the respective announcements attached hereto as Exhibit D.
If the Purchaser is advised by its outside legal counsel that it is required by
law or by the rules and regulations of the SEC to make any further disclosure,
it will first advise Holding of the content of the proposed disclosure, and the
time and place that the disclosure will be made, and the parties will endeavor
to make such disclosure jointly. This covenant shall survive termination of this
Agreement. Except as specifically superseded herein, the provisions of the
confidentiality agreement previously executed by the Purchaser with respect to
the transactions contemplated by this Agreement shall survive the execution and
termination of this Agreement and the Closing.
10.2. The Purchaser will (i) on the date hereof make all filings
and pay the requisite filing fee under the HSR Act with respect to the
transactions contemplated hereby; (ii) use all commercially reasonable efforts
to cooperate with the Amertranz Group in (a) determining which other
E-23
<PAGE>
filings are required to be made prior to the Closing Date with, and which other
consents, approvals, permits or authorizations are required to be obtained prior
to the Closing Date from, Governmental or Regulatory Authorities in connection
with the execution and delivery of this Agreement and the closing of the
transactions contemplated hereby, (b) timely making all filings and timely
seeking all such consents, approvals, permits or authorizations, and (c) seeking
all such consents, approvals, permits or authorizations necessary to assign or
transfer any Contracts which constitute CAS Assets; and (iii) use all
commercially reasonable efforts to take, or cause to be taken, all other action
and do, or cause to be done, all other things necessary, proper or appropriate
to close the transactions contemplated by this Agreement. The Purchaser will
take all commercially reasonable actions necessary or appropriate to cause the
prompt expiration or termination of any applicable waiting period under the HSR
Act in respect of the transactions contemplated hereby, including complying as
promptly as practicable with any requests for additional information and
assisting the Amertranz Group in responding to any such request for additional
information.
10.3. Following the Closing, the Purchaser will pay all of the
Assumed Obligations as and when due.
10.4. Following the Closing, the Purchaser will issue invoices for
CAS's services performed prior to the Closing and not yet invoiced in the
ordinary course of CAS's business. From and after the Closing Date, the
Purchaser shall, as agent of CAS, exercise its commercially reasonable efforts
to diligently collect all receivables owned by CAS as of the Closing Date
pursuant to Section 6 hereof.
10.5. Following the Closing, the Purchaser will prepare as due, in
the usual course, all checks or other disbursements, drawn on funds of Holding,
CAS or other subsidiary of Holding, from such depositories as designated by
Holding prior to or at the Closing, to pay such entities' accounts payable which
are not included in the Assumed Obligations. The Purchaser will forward to
Holding such checks or other disbursements for handling, together with all
supporting documentation. As compensation to the Purchaser for the accounts
payable services set forth above, CAS will pay to the Purchaser two percent of
all amounts so paid.
10.6. Following the Closing, the Purchaser will cooperate with the
Amertranz Group and its representatives and will provide the Amertranz Group and
its representatives with all information and access to personnel reasonably
requested in connection with the preparation of financial statements (including
independent audits) and federal and state tax returns of CAS, Holding, and
Holding's other subsidiaries.
10.7. For a period of three months following the Closing, the
Purchaser will allow CAS or Holding to use, rent-free, storage space at the 7001
Cessna Drive leased facility.
10.8. For a period of up to three months following the Closing,
the Purchaser will prepare as due, in the usual course, all required payroll
information with respect to Holding's Target Airfreight, Inc. subsidiary, and
transmit such information to the payroll processing service designated by
Holding.
11. Conditions Precedent to Obligations of CAS and Holding.
The Amertranz Group's obligation to close the transactions
pursuant to this Agree- ment is contingent on the fulfillment, at or prior to
the Closing Date, of each of the following conditions to the reasonable
satisfaction of Holding in its judgement (which judgement will not be
unreasonably exercised), any of which conditions may be waived in writing, in
whole or in part, by Holding:
E-24
<PAGE>
11.1. The representations and warranties made by or on behalf of
the Purchaser contained in this Agreement or in any certificate or document
delivered by, or at the direction of, the Purchaser to CAS or Holding pursuant
to the provisions hereof shall be true at and as of the time of the Closing as
though such representations and warranties were made at and as of such time.
11.2. The Purchaser shall have performed and complied in all
material respects with all covenants, agreements, and conditions required by
this Agreement to be performed or complied with by it prior to or at the
Closing.
11.3. The Purchaser shall have delivered to Holding all of the
exhibits and schedules required herein to be delivered by the Purchaser, and
copies of the documents referred to therein, each duly executed, if required,
and each such exhibit, schedule and document shall have been reasonably
acceptable to Holding.
11.4. Holding shall have received a certificate signed by the
chief executive offi- cer of the Purchaser and dated the Closing Date, to the
effect that the conditions specified in Sections 11.1 through 11.3 inclusive
have been fulfilled.
11.5. The waiting period applicable to the transactions
contemplated hereby under the HSR Act shall have expired or been terminated and
all necessary clearances pursuant to the HSR Act shall have been obtained, and
there shall be no Order or Regulation restricting enjoining or making illegal
the closing of the transactions contemplated under this Agreement.
11.6. Holding, CAS and the Purchaser shall have obtained (i) all
required consents for the assignment by CAS to the Purchaser of all of the
customer agreements listed on Schedule 7.19, and (ii) the consent or clearance
of the required governmental bodies as listed on Schedule 7.9 and Schedule 8.4
for the conclusion of the transactions contemplated by this Agreement.
11.7. Holding shall have received the following:
11.7.1. A certificate from the Secretary of State (or similar
office) of the Purchaser's jurisdiction of incorporation, dated at or about the
Closing Date, to the effect that the Purchaser is in good standing under the
laws of said jurisdiction.
11.7.2. An incumbency certificate for the Purchaser dated at
or about the Closing Date.
11.7.3. The opinion of Milbank, Tweed, Hadley & McCloy,
counsel to the Purchaser, dated the Closing Date, in the form attached hereto as
Exhibit E.
11.7.4. The duly executed Assumption Agreement.
11.7.5. The duly executed Escrow Agreement.
12. Conditions Precedent to Obligations of the Purchaser.
The Purchaser's obligation to close the transactions pursuant to
this Agreement is contingent on the fulfillment, at or prior to the Closing
Date, of each of the following conditions to the reasonable satisfaction of the
Purchaser in its judgement (which judgement will not be unreasonably exercised),
any of which conditions may be waived in writing, in whole or in part, by the
Purchaser:
E-25
<PAGE>
12.1. The representations and warranties by CAS and Holding
contained in this Agreement or in any certificate or document delivered by, or
at the direction of CAS or Holding to the Purchaser pursuant to the provisions
hereof shall be true at and as of the time of the Closing as though such
representations and warranties were made at and as of such time.
12.2. CAS and Holding shall have performed and complied in all
material respects with all covenants, agreements, and conditions required by
this Agreement to be performed or complied with by them prior to or at the
Closing.
12.3. CAS or Holding shall have delivered to the Purchaser all of
the exhibits and schedules required herein to be delivered by CAS or Holding,
and copies of the documents referred to therein, each duly executed, if
required, and such exhibits, schedules and documents shall have been reasonably
acceptable to the Purchaser.
12.4. All of the items listed on Schedule 7.16 shall have been
transferred and assigned to CAS, free and clear of all Liens.
12.5. The Purchaser shall have received a certificate signed by
the President of Holding and the Executive Vice President of CAS and dated the
Closing Date, to the effect that the conditions specified in Sections 12.1
through 12.4 inclusive have been fulfilled.
12.6. Subject to the provisions of Section 9.11, Holding, CAS and
the Purchaser shall have obtained the consent or clearance, in form and
substance satisfactory to the Purchaser, of the required governmental bodies and
third parties as listed on Schedule 7.9 and Schedule 8.4 for the conclusion of
the transactions contemplated by this Agreement and such consents shall not be
subject to the satisfaction of any condition that has not been satisfied or
waived and shall be in full force and effect; provided, however, that
notwithstanding the provisions of Section 9.11, the Purchaser's obligation to
close the transactions pursuant to this Agreement is contingent on the Amertranz
Group obtaining, prior to the Closing, all required consents for the assignment
by CAS to the Purchaser of all of the customer agreements listed on Schedule
7.19.
12.7. The waiting period applicable to the transactions
contemplated hereby under the HSR Act shall have expired or been terminated and
all necessary clearances pursuant to the HSR Act shall have been obtained, and
there shall be no Order or Regulation restricting, enjoining or making illegal
the closing of the transactions contemplated under this Agreement which could
reasonably be expected to otherwise result in a material diminution of the
benefits of the transactions contemplated by this Agreement to the Purchaser,
and there shall not be pending or threatened any action or proceeding in, before
or by any Governmental or Regulatory Authority which could reasonably be
expected to result in the issuance of any such Order or the enactment,
promulgation or deemed applicability to the Purchaser or the transactions
contemplated by this Agreement of any such Regulation.
12.8. The Purchaser shall have received the following:
12.8.1. No later than 15 days before the Closing Date, CAS's
unaudited monthly interim financial statements for the periods April 1, 1998
through the last day of the month ending more than 30 days prior to the Closing
Date, each certified by the chief financial officer of Holding and each prepared
in accordance with GAAP applied on a consistent basis with prior periods, except
that such unaudited financial statements will not contain footnotes and will
contain reasonable estimates, subject to adjustment, of accruals, deferrals, and
reserves consistent with past practices.
E-26
<PAGE>
12.8.2. The duly executed Bill of Sale.
12.8.3. Certificates from the Secretary of State of Delaware,
dated at or about the Closing Date, to the effect that each of CAS and Holding
is in good standing under the laws of the state of Delaware.
12.8.4. An incumbency certificate for each of CAS and Holding
dated at or about the Closing Date.
12.8.5. The opinion of Gordon, Feinblatt, Rothman, Hoffberger
& Hollander, LLC, counsel to CAS and Holding, dated the Closing Date, in the
form attached hereto as Exhibit F.
12.8.6. The opinion of Potter Anderson & Corroon LLP, special
counsel to Amertranz, to the effect that the performance of this Agreement by
CAS and Holding is not required to be approved by Holding's shareholders under
the General Corporation Law of the State of Delaware.
12.8.7. Subject to the provisions of Section 9.11, for each
of the Facility Leases, an estoppel certificate and consent to assignment from
the lessor thereunder in form and substance reasonably satisfactory to the
Purchaser.
12.8.8. The duly executed Escrow Agreement.
12.8.9. The certificates of the Chief Financial Officer of
CAS and the Chief Financial Officer of Holding in form and substance
satisfactory to the Purchaser certifying that after giving effect to the
transactions contemplated by this Agreement, Holding and CAS will be solvent.
12.9. The employment agreement between the Purchaser (or its
subsidiary) and Richard A. Faieta referred to in Section 13.2, shall be in full
force and effect, and Richard A. Faieta shall not be in breach thereof.
13. Concurrent Actions.
The parties intend that concurrent with the execution hereof:
13.1. Holding will obtain the opinion of BT Alex. Brown
Incorporated with respect to the fairness, from a financial point of view, of
the transaction contemplated by this Agreement to the shareholders of Holding
(the "Fairness Opinion"), in form and substance satisfactory to Holding, and
deliver a copy thereof to the Purchaser.
13.2. The Purchaser (or its subsidiary) will have entered into an
employment agreement with Richard A. Faieta, in form and substance satisfactory
to the Purchaser, to be effective as of the Closing Date.
13.3. The parties will make all filings under the HSR Act with
respect to the transactions contemplated hereby, and will request early
termination of the waiting period under the HSR Act.
E-27
<PAGE>
14. Non-Compete and Non-Solicitation Covenants.
14.1. Non-Competition. Holding and CAS undertake that for a period
of three years after the Closing Date, neither of them will, and none of their
subsidiaries and affiliate companies will, directly or indirectly, own, manage,
operate, join, control or participate in the ownership, management operation or
control of or be connected as a partner, consultant or otherwise with, any
business or organization which directly or indirectly, competes with, or in any
way interferes with, the CAS Business as now constituted or the freight and
logistics services of the Purchaser and its subsidiaries and affiliates to or
from the Caribbean, except that Holding and its subsidiaries and Affiliates may
continue to engage in the freight forwarding business between the mainland
United States and the Caribbean provided that gross sales revenue for such
business does not exceed, in the aggregate for all such entities, $3,000,000 per
year, and provided further that for all such permitted Caribbean freight
forwarding business engaged in by Holding or its subsidiaries or Affiliates for
customers for which Holding or its subsidiaries or Affiliates have not provided
Caribbean freight forwarding services during the six months prior to the date
hereof, Holding and its subsidiaries and Affiliates shall engage the Purchaser
or its subsidiaries or Affiliates to provide such Caribbean freight forwarding
services at the lowest rate charged by the Purchaser or its subsidiaries or
Affiliates, as applicable, during the prior 30 days for comparable services
provided to other freight forwarders other than Emery Worldwide.
14.2. Non-Solicitation. Holding and CAS further undertake that for
a period of three years after the Closing Date neither of them will, and none of
their subsidiaries or affiliates will, either on their own account or jointly
with any third party or on behalf of any other person, firm or corporation: (i)
directly or indirectly solicit or attempt to solicit the employment of any
person or persons who are or were employed in the CAS Business immediately prior
to the Closing Date or during the six months immediately preceding the Closing
Date; (ii) cause or attempt to cause any supplier to the CAS Business to
terminate or materially reduce its services to the Purchaser or any of its
Affiliates with respect to Caribbean freight forwarding business; or (iii)
disclose (unless otherwise disclosed by others prior thereto, or compelled by
judicial or administrative process to disclose) or use any confidential or
secret information relating to the CAS Business or any client, customer or
supplier of the CAS Business.
14.3. Injunctive Relief and Enforcement. In the event of breach by
Holding or CAS of the terms of Sections 14.1 and 14.2, the Purchaser shall be
entitled to institute legal proceedings to obtain damages for such breach, or to
enforce the specific performance of this Agreement and to enjoin Holding or CAS
from any further violation of Sections 14.1 and 14.2 and to exercise such
remedies cumulatively or in conjunction with all other rights and remedies
provided at law. Holding and CAS acknowledge, however, that the remedies at law
for any breach by either of them of the provisions of Section 14.1 and 14.2 may
be inadequate. In addition, in the event the undertakings set forth in Sections
14.1 and 14.2 shall be determined by any court of competent jurisdiction to be
unenforceable by reason of extending for too great a period of time or by reason
of being too extensive in any other respect, each such agreement shall be
interpreted to extend over the maximum period of time for which it may be
enforceable and to the maximum extent in all other respects as to which it may
be enforceable and enforced as so interpreted, all as determined by such court
in such action.
15. Indemnification.
15.1. Indemnification by Holding and CAS. Holding and CAS, jointly
and severally, hereby agree to indemnify and hold harmless the Purchaser and its
shareholders, affiliates, directors, officers, agents and employees
(collectively the "Purchaser Indemnitees"), from and against any and all Losses
(as hereinafter defined), to the extent such Losses arise out of, result from,
or are in connection with: (i) any breach by CAS or Holding of any of the terms
of this Agreement, (ii) any breach
E-28
<PAGE>
of any warranty or representation of CAS or Holding made herein or pursuant to
this Agreement, or (iii) any failure by CAS or Holding to perform or comply with
any of their covenants or obligations under this Agreement, (iv) the operation
of the CAS Assets or the CAS Business prior to the Closing, or (v) any
obligations of CAS to third parties other than the Assumed Obligations.
15.2. Indemnification by the Purchaser. The Purchaser hereby
agrees to in- demnify and hold harmless CAS and Holding and their respective
shareholders, affiliates, directors, officers, agents and employees
(collectively "Seller Indemnitees"), from and against any and all Losses, to the
extent such Losses arise out of, result from, or are in connection with: (i) any
breach by the Purchaser of any of the terms of this Agreement, (ii) any breach
of any warranty or representation of the Purchaser made herein or pursuant to
this Agreement, (iii) any failure by the Purchaser to perform or comply with any
of its covenants or obligations under this Agreement, (iv) the operation of the
Purchaser's business, and the operation by the Purchaser of the CAS Assets and
the CAS Business after the Closing, or (v) the payment of the Assumed
Obligations.
15.3. For purposes of this Agreement, "Losses" shall mean the
aggregate of any and all payments for claims, liabilities, suits, actions,
demands, charges, damages, losses, costs, or expenses (including reasonable
attorneys' fees, expert witness fees and court costs) of every kind and nature
incurred by the indemnified party, net of all reserves with respect to such
item, tax benefits (net of the net tax costs, if any, of the indemnified party
from the realization of such indemnification payment), insurance proceeds,
proceeds of subrogation and any indemnity, contribution or other similar payment
from third parties. Tax benefits will be considered to be realized for purposes
of this Section in the year in which an indemnity payment occurs, taking into
account the present value of any such tax benefits, and the amount of tax
benefits shall be determined by assuming the person entitled to be indemnified
is in the maximum applicable foreign, federal, state and local income tax
bracket applicable to the indemnitee for the taxable year preceding the taxable
year of the indemnitee in which claim for verification is made.
15.4. Except as provided in the sentence next immediately
following, no indemnification shall be made to any Purchaser Indemnitee under
this Section 15, except to the extent the aggregate amount of Losses by all
Purchaser Indemnitees exceeds $500,000 and, similarly, no indemnification shall
be made to any Seller Indemnitee under this Section 15 except to the extent the
aggregate amount of Losses by all Seller Indemnitees exceeds $500,000 ( such
$500,000 amounts are each the "Threshold"); and the maximum liability of any
indemnifying party pursuant to all claims for indemnification under this Section
and all breaches of this Agreement shall be $7,500,000 in the aggregate (the
"Maximum"). The Threshold and Maximum limitations set forth in this Section
shall not apply to claims for indemnification for breaches of the
representations and warranties set forth in Subsections 7.7, 7.8, 7.9, 7.10,
7.18, 7.24, 7.25, 7.26, 8.2, 8.3 and 8.4, and the covenants set forth in
Subsections 9.1., 10.1, 10.3, Section 14, or any obligation of Holding or CAS to
the Purchaser under Subsection 9.7. All amounts paid by the Purchaser to Holding
or CAS pursuant to Section 22.2.2 shall be credited against amounts payable by
the Purchaser to CAS or Holding for indemnification hereunder.
15.5. Whenever any claim for indemnification is made, or any suit
or proceeding is instituted, which if meritorious or which if prosecuted
successfully would entitle a party to indemnification under this Section 15 (a
"Claim"), the person seeking indemnification (the "Indemnitee"), shall promptly
notify the party from whom indemnification is sought (the "Indemnitor ") of the
Claim and, when known, the facts constituting the basis for such Claim. In the
event of any such Claim for indemnification hereunder resulting from or in
connection with any Claim by a third party, the notice shall specify, if known,
the amount or an estimate of the amount of the liability arising therefrom. The
Indemnitee shall not settle or compromise any Claim by a third party for which
it is entitled to indemnification hereunder without the prior written consent of
the Indemnitor, which shall not be
E-29
<PAGE>
unreasonably withheld or delayed; provided, however, that if suit shall have
been instituted against the Indemnitee(s) and the Indemnitor(s) shall not have
taken control of such suit after notification thereof as provided in Subsection
15.6 of this Agreement, the Indemnitee shall have the right to settle or
compromise such claim upon giving notice to the Indemnitor as provided in
Subsection 15.6.
15.6. In connection with any Claim which may give rise to
indemnification hereunder resulting from or arising out of any Claim (or legal
proceeding) by a person other than an Indemnitee, the Indemnitor, at its sole
cost and expense, may, upon written notice to the Indemnitee, assume the defense
of any such Claim (including legal proceedings in connection therewith) if the
Indemnitor acknowledges to the Indemnitee in writing the Indemnitor's obligation
to indemnify the Indemnitee with respect to all elements of such Claim. If the
Indemnitor assumes the defense of any such Claim (or legal proceeding), the
Indemnitor shall select counsel reasonably acceptable to the Indemnitee to
conduct the defense of such Claims (or legal proceedings) and at the sole cost
and expense of the Indemnitor(s) shall take all steps necessary in the defense
or settlement thereof. The Indemnitor(s) shall not consent to a settlement of,
or the entry of any judgment arising from, any such Claim (or legal proceeding),
without the prior written consent of the Indemnitee, which shall not be
unreasonably withheld or delayed. The Indemnitee shall be entitled to
participate in (but not control) the defense of any such action, with its own
counsel and at its own expense. If the Indemnitor does not assume the defense
against any such Claim (or litigation resulting therefrom) within 30 days after
the date the Indemnitee notifies the Indemnitor of such Claim: (a) the
Indemnitee may defend against such Claim (or litigation) in such manner as it
may deem appropriate, including, but not limited to, settling such Claim, after
giving notice of the same to the Indemnitor(s), on such terms as the Indemnitee
may deem appropriate, and (b) the Indemnitor(s) shall be entitled to participate
in (but not control) the defense against such Claim, with its counsel and at its
own expense. If the Indemnitor thereafter seek to question the manner in which
the Indemnitee defended against such Claim or the amount or nature of any such
settlement, the Indemnitor shall have the burden to prove by a preponderance of
the evidence that the Indemnitee did not defend against or settle such Claim in
a reasonably prudent manner.
16. No Brokerage.
16.1. Other than the obligations of the Holding to BT Alex. Brown
Incorporated, neither Cas or Holding has incurred any obligation or liability,
contingent or otherwise, for brokerage fees, finder's fees, agent's commissions,
or the like in connection with this Agreement or the transactions contemplated
hereby. Holding agrees to indemnify and hold the Purchaser harmless against and
in respect of any such obligation or liability based on agreements,
arrangements, or understandings claimed to have been made by Holding or CAS with
any third party.
16.2. The Purchaser has not incurred any obligation or liability,
contingent or otherwise, for brokerage fees, finder's fees, agent's commissions,
or the like in connection with this Agreement or the transactions contemplated
hereby. The Purchaser agrees to indemnify and hold CAS and Holding harmless
against and in respect of any such obligation or liability based on agreements,
arrangements, or understandings claimed to have been made by the Purchaser with
any third party.
17. Nature of Representations and Warranties.
All of the parties hereto are executing and carrying out the
provisions of this Agreement in reliance on the representations, warranties,
covenants and agreements contained in this Agreement or at the closing of the
transactions contemplated hereunder, and any investigation that they might have
made or any other representations, warranties, covenants, agreements, promises
or
E-30
<PAGE>
information, written or oral, made by the other party or any other person shall
not be deemed a waiver of any breach of any such representation, warranty,
covenant or agreement.
18. Notices.
All notices, writings and other communications required or
permitted to be given pursuant to this Agreement shall be in writing, and if
such notices are hand-delivered or faxed, return fax acknowledgement requested,
to the address set forth below, they shall be deemed to have been received on
the business day so delivered or transmitted; if such notices are transmitted by
overnight courier, to the address set forth below, they shall be deemed to have
been received on the business day following the date on which so transmitted,
provided that any notice, writing or other communication received after 5:00
p.m., Eastern Time, shall be deemed to have been received on the next business
day:
CAS and Holding: Amertranz Worldwide Holding Corp.
112 East 25th Street
Baltimore, Maryland 21218
Fax (410) 338-1105
Attn: Mr. Stuart Hettleman
With a copy to: Zelig Robinson, Esquire
Hillel Tendler, Esquire
Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
233 East Redwood Street
Baltimore, Maryland 21202
Fax (410) 576-4167
The Purchaser: Roger E. Payton
GeoLogistics Corporation
13952 Denver West Parkway, Suite 150
Golden, Colorado 80401
Fax (303) 704-4410
With a copy to: Eric H. Schunk, Esquire
Milbank, Tweed, Hadley & McCloy
601 South Figueroa Street
Los Angeles, California 90017
Fax (213) 629-5063
Any party may change its address for notice or payment purposes by giving notice
the other parties as hereinabove provided.
19. Expenses.
19.1. Except as otherwise provided herein, each party hereto shall
be responsible for and bear all of its own costs and expenses (including the
expenses of its representatives) incurred at any time in connection with
negotiation, due diligence and closing the transaction described herein.
19.2. Each party hereto shall pay all income taxes and other taxes
based on its taxable income which may be required as a result of the
transactions contemplated hereby. CAS or Holding will pay any sales, transfer or
franchise taxes arising out of the transfer of the CAS Assets
E-31
<PAGE>
hereunder. Holding and CAS shall file all necessary documentation and Returns
with respect to such taxes.
20. Survival.
Except as set forth in Section 14 and as otherwise provided
herein, the representations, warranties, covenants and agreements herein
contained shall survive the execution, and delivery of this Agreement and the
closing of the transactions contemplated hereby, and shall continue for a period
of two years following the Closing Date, except for breaches of the
representations and warranties set forth in Sections 7.7, 7.18, 7.25, 7.26, 8.2
and 8.5, and the covenants set forth in Sections 9.1 and 10.1, which shall
survive until the expiration of all applicable statutes of limitation with
respect thereto, and the representations and warranties set forth in Section
7.26, which shall survive until the expiration of all applicable statutes of
limitation with respect thereto or to derivative claims arising from
environmental conditions existing at the time of the Closing.
21. Exclusivity.
21.1. Until the Closing Date or termination of this Agreement,
Holding and CAS will not directly or indirectly, through any representative or
otherwise, solicit or entertain offers from, negotiate with or in any manner,
encourage, discuss, accept or consider any proposal of any other person relating
to the acquisition of the CAS Assets, the CAS Shares or the CAS Business in
whole or in part, whether directly or indirectly, through purchase, merger,
consolidation, or otherwise. Notwithstanding the above, Holding and CAS may,
directly or indirectly, furnish information and access, in each case only in
response to unsolicited requests therefor, to any reputable, unaffiliated, third
party person, entity or group pursuant to confidentiality agreements, and may
participate in discussions and negotiate with such entity or group concerning
any merger, sale of the CAS Assets, sale of the CAS Shares or similar
transaction involving CAS, if (i) such person, entity or group has submitted an
unsolicited, written, bona fide proposal to Holding's Board of Directors
relating to any such transaction (an "Alternative Proposal"), (ii) Holding's
Board of Directors by a majority vote determines in its good faith judgment,
based as to legal matters on the written advice of legal counsel, that failing
to take such action would result in a substantial risk of liability for a breach
of the Board of Directors' fiduciary duty, and (iii) Holding's Board of
Directors shall have determined, after consultation with its legal advisors and
after review of a written opinion from its financial advisors, that the terms of
such Alternative Proposal are principally superior to the terms set forth in
this Agreement and that such Alternative Proposal is reasonably capable of being
financed (a "Superior Proposal"). Holding shall provide a copy of any such
written proposal to the Purchaser immediately after receipt thereof and shall
keep the Purchaser fully informed of the status and details of such Alternative
Proposal.
22. Termination of Agreement.
22.1. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing, by
written notice from the party terminating the Agreement to the other party, as
follows:
22.1.1. By Mutual Consent. By the mutual written consent of
Holding and the Purchaser.
22.1.2. By Either Party. At any time before the Closing, by
Holding or the Purchaser, in the event of a material breach hereof by the
non-terminating party if such non-
E-32
<PAGE>
terminating party fails to cure such breach within five business days following
written notification thereof by the terminating party.
22.1.3. By Holding. By Holding, if (i) in accordance with
Section 21, in the exercise of the good faith judgment of Holding's Board of
Directors as to its fiduciary duties to its stockholders imposed by law based on
the written opinion of outside counsel, the Board of Directors of Holding
authorizes the Company to enter into a binding written agreement covering a
transaction that constitutes a Superior Proposal and CAS and Holding provide
written notification to the Purchaser in accordance with Section 21, and (ii)
the Purchaser, within 10 business days following receipt of CAS's written
notification of its intention to enter into a binding agreement for a Superior
Proposal, does not make an offer that the Board of Directors of Holding
determines, in good faith after consultation with its financial advisors, is at
least as favorable, from a financial point of view, to the stockholders of
Holding as the Superior Proposal, and (iii) CAS and Holding pays the Termination
Fee to the Purchaser.
22.2. Effect of Termination and Abandonment.
22.2.1. If this Agreement is terminated by Holding pursuant
to Section 22.1.3, then, within seven days following such termination, the
Amertranz Group shall pay to the Purchaser, by wire transfer of immediately
available funds, a fee of $2,000,000 (the "Termination Fee"). Holding and CAS
each acknowledges that the agreements contained in this Section 22.2.1 are an
integral part of the transactions contemplated in this Agreement, and that,
without these agreements, the Purchaser would not enter into this Agreement;
accordingly, if the Amertranz Group fails to promptly pay the amount due
pursuant to this Section, and, in order to obtain such payment, the Purchaser
commences a suit which results in a judgment against Holding or CAS for the
Termination Fee, the Amertranz Group shall pay to the Purchaser its costs and
expenses (including reasonable attorneys' fees) in connection with such suit,
together with interest on the amount of the Termination Fee at the rate of 12%
per annum from the date the Termination Fee was required to be paid.
22.2.2. In the event of termination of this Agreement
pursuant to this Section 22, or if the Closing shall not have occurred on or
before the Closing Date, all obligations of the parties hereto shall terminate,
except the obligations of the parties set forth in this Section 22.2 and except
for the provisions of Sections 9.1, 10.1, 19, 22, 25, 26, 27, and 28. If the
Closing shall not have occurred on or before the Closing Date, or in the event
of termination of this Agreement for any reason other than pursuant to Sections
22.1.1 or 22.1.3, nothing herein shall prejudice the ability of the
non-terminating party from seeking damages from any other party for any willful
breach of this Agreement, including reasonable attorneys' fees and the right to
pursue any remedy at law or in equity, provided, however, that in the event
Holding or CAS is entitled to receive payment for damages pursuant to this
Section and such actual damages are finally determined to be less than
$1,000,000 exclusive of attorney's fees, the Purchaser shall pay to Holding and
CAS the sum of $1,000,000 plus reasonable attorney's fees.
23. Effect of Waiver.
The failure of any party at any time or times to require
performance of any provision of this Agreement will in no manner affect the
right to enforce the same. The waiver by any party of any breach of any
provision of this Agreement will not be construed to be a waiver by any such
party of any succeeding breach of that provision or a waiver by such party of
any breach of any other provision.
E-33
<PAGE>
24. Severability.
The invalidity, illegality or unenforceability of any provision or
provisions of this Agreement will not affect any other provision of this
Agreement, which will remain in full force and effect, nor will the invalidity,
illegality or unenforceability of a portion of any provision of this Agreement
affect the balance of such provision. In the event that any one or more of the
provisions contained in this Agreement or any portion thereof shall for any
reason be held to be invalid, illegal or unenforceable in any respect, this
Agreement shall be reformed, construed and enforced as if such invalid, illegal
or unenforceable provision had never been contained herein.
25. Governing Law.
This Agreement shall be governed by and construed in accordance
with, the laws of the State of New York without regard to conflict of law
principles.
26. Enforcement.
Any suit, action or proceeding with respect to this Agreement,
shall be brought in the state and federal courts located in New York. The
parties hereto hereby accept the exclusive jurisdiction of those courts, as set
forth above, for the purpose of any such suit, action or proceeding.
The parties hereto hereby irrevocably waive, to the fullest extent
permitted by law, any objection that any of them may now or hereafter have to
the laying of venue of any suit, action or proceeding arising out of or relating
to this Agreement or any judgment entered by any court in respect thereof
brought as set forth above, and hereby further irrevocably waive any claim that
any suit, action or proceeding so brought, has been brought in an inconvenient
forum.
The parties hereto acknowledge and agree that any party's remedy
at law for a breach or threatened breach of any of the provisions of this
Agreement would be inadequate and such breach or threatened breach shall be per
se deemed as causing irreparable harm to such party. Therefore, in the event of
such breach or threatened breach, the parties hereto agree that, in addition to
any available remedy at law, including but not limited to monetary damages, an
aggrieved party, without posting any bond, shall be entitled to obtain, and the
offending party agrees not to oppose the aggrieved party's request for,
equitable relief in the form of specific enforcement, temporary restraining
order, temporary or permanent injunction, or any other equitable remedy that may
then be available to the aggrieved party.
27. Binding Agreement; Assignment.
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. This Agreement
shall not be assignable by any party hereto except as provided herein or with
the prior written consent of the other parties. The Purchaser may assign its
rights hereunder to any wholly-owned subsidiary of the Purchaser or in
connection with any financing arrangement that the Purchaser or such wholly
owned subsidiary may enter into, provided, that the Purchaser shall remain
obligated for all obligations to CAS or Holding hereunder.
28. Entire Agreement; Modification.
This Agreement, which includes all schedules and exhibits hereto,
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof, superseding, except as otherwise provided herein, all
prior negotiations, correspondence, understandings and agreements,
E-34
<PAGE>
between the parties; no amendment or modification of this Agreement shall be
binding on the parties unless made in writing and duly executed by all parties.
There are no oral or implied agreements and no oral or implied warranties
between the parties hereto other than those expressed herein.
29. Further Assurances.
Each of the parties hereto agrees to execute, acknowledge, seal
and deliver, after the date hereof and after the Closing, such further
assurances, instruments and documents and to take such further actions as the
other may reasonably request in order to fulfill the intent of this Agreement
and the transactions contemplated hereby.
30. Counterparts.
This Agreement may be executed in counterparts, all of which taken
together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
CAS:
CARIBBEAN AIR SERVICES, INC.
By: /s/ Stuart Hettleman
Stuart Hettleman
Executive Vice President
HOLDING:
AMERTRANZ WORLDWIDE HOLDING CORP.
By: /s/ Stuart Hettleman
Stuart Hettleman
President
THE PURCHASER:
GEOLOGISTICS CORPORATION
By: /s/ Ron Jackson
Ron Jackson
Vice President and General Counsel
E-35
<PAGE>
ASSET PURCHASE AGREEMENT
INDEX OF SCHEDULES AND EXHIBITS
Schedule
1.1 - CAS Assets
1.2 - CAS-D Freight Handling Agreement
1.3 - Freight Handling Agreement
4 - Allocation of Purchase Price
6.1 - CAS Pre-Paid Services
7.6 - CAS and Holding Corporate Documents
7.9 - CAS Approvals
7.10 - Exceptions to Title to CAS Assets
7.11 - CAS Licenses and Marks
7.13 - CAS Financial Statements
7.14 - Post-Financial Statement Date CAS Liabilities
7.15 - CAS Facility Leases
7.16 - Exceptions to CAS Assets
7.17 - Material Adverse Changes to CAS
7.19 - CAS Agreements and Authorizations
7.20 - Exceptions to Compliance with Regulations
7.21 - CAS Litigation
7.22 - CAS Insurance Policies
7.24 - CAS Employment Agreements
7.25 - CAS Employee Benefit Plans and Employee Loans
7.26 - CAS Environmental Exceptions
7.29 - CAS Affiliate Transactions
8.4 - Purchaser Approvals
Exhibit
A - Assumption Agreement
B - Bill of Sale
C - Escrow Agreement
D - Press Releases
E - Purchaser's Counsel's Opinion
F - CAS's and Holding's Counsel's Opinion
The information disclosed on any Schedule is deemed to be disclosed on all other
relevant Schedules to this Agreement.
E-36
<PAGE>
Exhibit 99.1
Amertranz Holding Corp. Completes Sale of Caribbean Air Services
BALTIMORE--(BUSINESS WIRE)--July 14, 1998--Amertranz Worldwide Holding Corp.
AMTZ announced today that it has completed the sale of the operating assets of
its Caribbean Air Services, Inc. subsidiary to GeoLogistics Corporation of
Denver, Colorado for $27 million in cash. Amertranz anticipates that it also
will receive an additional $4 million from Caribbean's accounts receivable after
payment of its liabilities.
The Company announced that its strategy was to deleverage its balance sheet and
provide required working capital to take advantage of the many growth
opportunities available to its Target AirFreight, Inc. subsidiary. The sale of
the Caribbean Air Service's assets increased Amertranz's tangible net worth by
approximately $24 million and its working capital increased by approximately $19
million. The Company previously released a proforma balance sheet giving the
effect of the transaction as if it was completed as of March 31, 1998 and the
resulting deleveraging of the balance sheet.
BT Alex Brown represented Amertranz in the transaction.
Stuart Hettleman, President and Chief Executive Officer of Amertranz, said, "The
sale of the Caribbean Air Services assets creates the substantial improvement in
our financial strength which will allow Target AirFreight to take advantage of
numerous opportunities, including improved vendor pricing and attracting quality
personnel and agents on a world-wide basis, which we believe will drive the
Company's profitability."
Amertranz Worldwide Holding Corp. provides freight forwarding services through
its wholly-owned subsidiary, Target AirFreight, Inc. The Company also provides
total logistics services.
Statements contained in this press release that are not historical facts are
forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. Although Amertranz Worldwide believes that the
expectations reflected in such forward-looking statements are reasonable, the
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those projections.
E-37
<PAGE>
