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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) AUGUST 14, 1997
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ATLANTIC EXPRESS TRANSPORTATION CORP.
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(Exact Name of Registrant as Specified in its Charter)
NEW YORK
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(State or Other Jurisdiction of Incorporation)
PENDING 13-392-3467
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(Commission File Number) (I.R.S. Employer Identification No.)
7 NORTH STREET, STATEN ISLAND, NEW YORK, 10302-1205
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(Address of Principal Executive Offices) (Zip Code)
(718) 442-7000
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(Registrant's Telephone Number, Including Area Code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 14, 1997, Atlantic Express Transportation Corp. (the
"Company"), a New York corporation, completed the acquisition of 100% of the
common stock of Central New York Coach Sales & Service, Inc. ("Coach") and
Jersey Bus Sales, Inc. ("Jersey") and certain related real property (together
with Coach and Jersey, collectively, "Central"). The Company acquired Central
pursuant to a Stock Purchase Agreement, dated as of June 30, 1997 (the "Stock
Purchase Agreement"), by and among Central, Jersey, Thomas A. Denney ("TAD"),
Marlene C. Denney ("MCD") and the Company. A copy of the Stock Purchase
Agreement is attached hereto as Exhibit 2.1 and incorporated herein by
reference.
The Company acquired Central for total consideration of $31.7 million,
consisting of (i) $26.5 million in cash (including the repayment of long-term
indebtedness effective as of July 31, 1997); (ii) the assumption and repayment
of $3.0 million of short-term indebtedness net of cash (as of March 31, 1997);
and (iii) its agreement to issue a $2.2 million mortgage and note relating to
the certain real property. The Company funded the acquisition of Central by
using a portion of the sale $40.0 million aggregate principal amount of its
103/4% Senior Secured Notes due 2004.
Central is the leading authorized distributor of school buses
manufactured by Blue Bird Body Company, which is the leading manufacturer of
school buses in North America. Central also currently operates 147 school buses
in New Jersey. The Company intends to continue to operate the businesses of
Central.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired.*
(b) Pro Forma Financial Information.*
(c) The following exhibits are filed herewith:
2.1 Stock Purchase Agreement, dated as of June 30, 1997, by and among
Central New York Coach Sales & Service, Inc., Jersey Bus Sales,
Inc., Thomas A. Denney, Marlene C. Denney and Atlantic Express
Transportation Corp.
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* It is impracticable for the Company to provide the required financial
statements and pro forma financial information as of the date hereof. The
Company will file the required financial statements and pro forma financial
information no later than 60 days after the date hereof.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ATLANTIC EXPRESS TRANSPORTATION
CORP.
/s/Nathan Schlenker
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Nathan Schlenker
Chief Financial Officer
Date: August 28, 1997
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE
2.1 Stock Purchase Agreement, dated as of June
30, 1997, by and among Central New York Coach
Sales & Service, Inc., Jersey Bus Sales,
Inc., Thomas A. Denney, Marlene C. Denney and
Atlantic Express Transportation Corp.
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EXHIBIT 2.1
June 30, 1997
Stock Purchase Agreement by and among
CENTRAL NEW YORK COACH SALES & SERVICE, INC., a New York
corporation with an office located at 7765 Lakeport Road,
Chittenango, NY 13037, ("Central");
JERSEY BUS SALES, INC., a New Jersey corporation with an
office at 2015 Route 206, Bordentown, NJ 08505 ("Jersey");
THOMAS A. DENNEY, residing at 108 White Heron Circle,
Fayetteville, New York 13066;
MARLENE C. DENNEY, residing at 8404 Hobnail Road, Manlius,
New York 13104; and
ATLANTIC EXPRESS TRANSPORTATION CORP., a New York
corporation having an office at 7 North Street, Staten
Island, New York ("Buyer").
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS..........................................................2
ARTICLE II PURCHASE AND SALE...................................................9
2.01 Purchase and Sale Shares.................................................9
2.02 Purchase Price...........................................................9
2.03 Payment of Purchase Price...............................................11
2.04 Closing.................................................................11
ARTICLE III REPRESENTATIONS
AND WARRANTIES OF SELLERS.....................................................11
3.01 Organization- Charter and By-laws.......................................11
3.02 Authorization and Enforceability........................................11
3.03 Shares; Capitalization..................................................12
3.04 Subsidiaries and Investments............................................12
3.05 Qualification...........................................................12
3.06 No Violation of Laws or Agreements; Consents............................12
3.07 Financial Statements....................................................13
3.08 Absence of Undisclosed Liabilities......................................13
3.09 Guaranties..............................................................13
3.10 No Changes..............................................................13
3.11 Tax Matters.............................................................14
3.12 Real Property...........................................................14
3.13 Title to and Condition of Properties and Assets.........................14
3.14 Receivables.............................................................15
3.15 No Pending Litigation or Proceedings....................................15
3.16 Contracts...............................................................15
3.17 Contract Compliance.....................................................15
3.18 School Bus Transportation Contracts.....................................15
3.19 Permits.................................................................16
3.20 Transactions With Related Parties.......................................16
3.21 Labor Matters...........................................................16
3.22 Insurance...............................................................16
3.23 Employee Benefit Matters................................................17
3.24 Environmental Matters...................................................18
3.25 Banking Relations.......................................................19
3.26 Brokers and Finders Fees................................................19
3.27 Long Term Debt..........................................................19
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ARTICLE IV REPRESENTATIONS
AND WARRANTIES OF BUYER.......................................................19
4.01 Organization; Corporate Power
and Authority: Authorization...........................................19
4.02 No Violation of Laws or Agreements......................................19
4.03 Investment Representation...............................................20
4.04 Brokers and Finders Fees................................................20
4.05..........................................................................25
ARTICLE V CERTAIN COVENANTS...................................................20
5.01 Conduct of Business Pending Closing.....................................20
5.02 Fulfillment of Agreements...............................................21
5.03 Publicity...............................................................21
5.04 Legends.................................................................21
5.05 Dividend................................................................22
5.06 Tax Matters.............................................................22
5.06.3Tax Escrow..............................................................22
5.07 Covenant Not to Compete.................................................23
5.08 Employment of Thomas A. Denney..........................................24
5.09 Accounts Receivable; Officer's Obligations..............................25
ARTICLE VI CONDITIONS TO
CLOSING; TERMINATION..........................................................25
6.01 Conditions Precedent to Obligation of Buyer.............................25
6.02 Conditions Precedent to Obligation of Sellers...........................27
6.03 Deliveries and Proceedings at Closing...................................28
ARTICLE VII WIRE TRANSFER;
RESCISSION; ESCROW PROVISIONS.................................................30
7.01 Wire Transfer...........................................................30
7.02 Operations in Transition Period.........................................30
7.03 Rescission..............................................................30
7.04 Escrow Documents........................................................30
ARTICLE VIII INDEMNIFICATION..................................................31
8.01 Indemnification By Sellers..............................................31
8.02 Indemnification By Buyer................................................32
8.03 Notice of Claims........................................................32
8.04 Third Party Claims......................................................33
8.05 Minimizing Losses.......................................................33
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ARTICLE IX MISCELLANEOUS......................................................33
9.01 Construction............................................................33
9.02 Costs and Expenses......................................................33
9.03 Governing Law...........................................................33
9.04 Further Assurances......................................................33
9.05 Notices.................................................................34
9.06 Assignment; Governing Law...............................................35
9.07 Amendment and Waiver; Cumulative Effect.................................35
9.08 Entire Agreement; No Third Party Beneficiaries..........................35
9.09 Severability............................................................36
9.10 Counterparts............................................................36
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This Stock Purchase Agreement ("Agreement"), dated as of June 30, 1997, by
and among
CENTRAL NEW YORK COACH SALES & SERVICE, INC., a New York
corporation with an office located at 7765 Lakeport Road,
Chittenango, NY 13037, ("Central");
JERSEY BUS SALES, INC., a New Jersey corporation with an
office at 2015 Route 206, Bordentown, NJ 08505 ("Jersey");
THOMAS A. DENNEY, residing at 108 White Heron Circle,
Fayetteville, New York 13066;
MARLENE C. DENNEY, residing at 8404 Hobnail Road, Manlius,
New York 13104; and
ATLANTIC EXPRESS TRANSPORTATION CORP., a New York
corporation having an office at 7 North Street, Staten
Island, New York ("Buyer").
WITNESSETH:
WHEREAS, Thomas A. Denney and Marlene C. Denney are the owners of all of
the issued and outstanding shares of the capital stock of Central and Jersey ;
and
WHEREAS, Central and Jersey are engaged in the business of the sale and
servicing and of school bus and other motor vehicles; and Jersey is also engaged
in the business of providing school bus transportation services; and
WHEREAS, Buyer has agreed to purchase and Thomas A. Denney and Marlene C.
Denney have agreed to sell all of the capital stock of Central and Jersey on the
terms and conditions hereinafter set forth in this Agreement; and
WHEREAS, concurrently with the execution of this agreement Buyer and Thomas
A. Denney and Marlene C. Denney are entering into an option agreement for the
sale by Thomas A. Denney and Marlene C. Denney to Buyer of real property and
improvements presently leased to Central and Jersey.
NOW, THEREFORE, in consideration of the premises and mutual
representations, warranties and covenants contained herein, and intending to be
legally bound hereby, the parties agree as follows:
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ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings
specified or referred to in this Article I:
"APPLICABLE CONTRACT" -- any contract (a) under which a Company has or may
acquire any rights, (b) under which a Company has or may become subject to any
obligation or liability.
"BALANCE SHEET DATE" - December 31, 1996.
"BLUE BIRD" -- The Blue Bird Body Company, Inc.
"BLUEBIRD FRANCHISE AGREEMENTS" -- the distribution contracts (a) between
Blue Bird and Jersey for school type buses dated July, 1993; and for commercial
type buses dated October, 1996; and (b) between Blue Bird and Central for school
type buses; and for commercial type buses dated September, 1996.
"BREACH" -- a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any material inaccuracy in or breach of, or any failure to perform or
comply with, such representation, warranty, covenant, obligation, or other
provision, or (b) any true and valid claim (by any Person) or other occurrence
or circumstance that is or was inconsistent with such representation, warranty,
covenant, obligation, or other provision, and the term "Breach" means any such
inaccuracy, breach, failure, claim, occurrence, or circumstance.
"BUYER" -- Atlantic Express Transportation Corp.
"CENTRAL" -- Central New York Coach Sales, Inc.
"CLOSING" -- as defined in Section 2.04.
"CLOSING DATE" -- the date and time as of which the Closing actually takes
place.
"COMPANIES" -- Central and Jersey
"CONSENT" -- any approval, consent, ratification, waiver, or other
authorization (including, but not limited to, any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by
and/or in connection with this Agreement.
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"ENCUMBRANCE" -- any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer (other than restrictions imposed by applicable federal or state
securities laws), receipt of income, or exercise of any other attribute of
ownership.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" -- any direct cost,
damages, expense, liability, obligation, or other responsibility arising from or
under Environmental Law or Occupational Safety and Health Law and consisting of
or relating to:
(a) any environmental, health, or safety matters or conditions (including,
but not limited to, on-site or off-site contamination, occupational safety
and health, and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law:
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or
response actions ("Cleanup") required by applicable Environmental Law or
Occupational Safety and Health Law (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and for
any natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial measures
required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include the types
of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. 9601 et seq., as
amended ("CERCLA").
"ENVIRONMENTAL LAW" -- any Legal Requirement that requires or relates to:
(a) advising and/or notifying appropriate authorities, employees, and the
public of any intended or actual releases of pollutants or hazardous
substances or materials, violations of discharge limits, or other
prohibitions and of the commencements of activities, such as resource
extraction or construction, that could impact on the Environment;
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(b) preventing or reducing the release of pollutants or hazardous
substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and used so
that they do not present risks to health or the Environment when used or
disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the transportation
of hazardous substances, pollutants, oil, or other potentially harmful
substances;
(g) cleaning up pollutants that have been released, preventing the threat
of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them, for
damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for
injuries done to public assets.
"ERISA" -- the Employee Retirement Income Security Act of 1974, as amended,
or any successor law, and any regulations and rules issued thereunder.
"ESCROW AGENT" -- the firm of Menter, Rudin & Trevelpiece, P.C.
"FINANCIAL STATEMENTS" -- the balance sheets, income statements, statements
of retained earnings and statements of cash flow for each of the Companies at
December 31, 1996 and for the year then ended.
"GAAP" -- United States generally accepted accounting principles .
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement, including, but not limited to, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
"GOVERNMENTAL BODY" -- any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
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(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official, or entity and any
court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority
or power of any nature.
"HAZARDOUS ACTIVITY" -- the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the New
York Real Property and/or the New Jersey Property (the "Property") or any part
thereof into the Environment, and any other act, business, operation, or thing
that increases the danger, or risk of danger, or poses an unreasonable risk of
harm to persons or property on or off the Property, or that may affect the value
of any of the Property or any Company.
"HAZARDOUS MATERIALS" -- any waste materials, chemicals or other substances
that are listed, defined, designated, or classified as, or otherwise determined
to be, hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law or that could result in the imposition of
liabilities under any Environmental Law, including, but not limited to, any
admixture or solution thereof, and specifically including petroleum (including
crude oil or any fraction thereof) and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"IRC" -- the Internal Revenue Code of 1986, as amended, or any successor
law, and any rules or regulations thereunder .
"IRS" -- the United States Internal Revenue Service or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"JERSEY" -- Jersey Bus Sales, Inc.
"KNOWLEDGE" -- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if (i) such individual is actually aware of such
fact or other matter; or (ii) if such individual upon the exercise of due
inquiry would be expected to be aware of such fact or matter.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, executive, manager, executor, or
trustee of such Person (or in any similar capacity) has, or at any time had,
Knowledge of such fact or matter.
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"LEGAL REQUIREMENT" -- any federal, state, local, municipal, foreign,
international, multinational, Order, constitution, law, ordinance, principle of
common law, regulation, statute, or treaty in effect and applicable to the
companies as of the date of this Agreement.
"LONG TERM DEPT" -- Long term debt shall include all debt having an
original term of more than one year including the current portion of such debt;
and obligations under capital leases reflected on the Financial Statements
including current portion of obligations under capital leases.
"MATERIAL ADVERSE CHANGE" OR "MATERIAL ADVERSE EFFECT" -- any act,
circumstance or event that is material and adverse to (a) the business,
operations, property, condition (financial or otherwise), results of operations
or prospects of the Companies, (b) the Property or the Companies' interest in
the Property, or (c) the validity or enforceability of this Agreement.
"NET ASSETS" -- Total assets of the Companies on a combined basis (less
property, plant and equipment net of depreciation) minus total liabilities (less
long term debt as defined herein) as determined on a combined basis for the
Companies.
"NEW JERSEY REAL PROPERTY" -- The real property and improvements owned by
Thomas A. Denney and Marlene C. Denney commonly known as and located at 2015
Route 206 Bordentown, New Jersey;
"NEW YORK REAL PROPERTY" -- The real property and improvements owned by
Thomas A. Denney and Marlene C. Denney, known as and located at 7765 Lakeport
Road, Chittenango New York;
"OCCUPATIONAL SAFETY AND HEALTH LAW" -- any Legal Requirement which are
designed to or in any way otherwise provide for a safe and healthy working
conditions and (ii) the reduction or amelioration occupational safety and
health hazards, and any program, whether governmental or private (including, but
not limited to, those promulgated or sponsored by industry associations and
insurance companies), designed to or in any other way provide for safe and
healthy working conditions.
"ORDER" -- any award, decision, injunction, writ, judgment, order,
stipulation, ruling, subpoena, or verdict entered, issued, made, or rendered by
any court, administrative agency, or other Governmental Body or by any
arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if such action is
consistent with the past practices of such Person and is taken in the ordinary
course of the normal day-to-day operations of such Person.
"ORGANIZATIONAL DOCUMENTS" -- (a) the articles or certificate of
incorporation (or similar organizational documents) and the bylaws (or similar
document) of a corporation; (b) the
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partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) the operating agreement and certificate of
formation of a limited liability company; (e) any charter or similar document
adopted or filed in connection with the creation, formation, or organization of
a Person; and (f) any amendment to any of the foregoing.
"PERMITTED DISTRIBUTIONS" -- $125,000 plus a distribution which may be
made to Sellers, if the Companies, on a combined basis, have taxable income for
the period from January 1, 1997 to the Closing Date, which distribution shall
equal 35% of such taxable income.
"PERSON" -- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"PROPERTY" -- The New Jersey Real Property and the New York Real Property.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought
conducted, or heard by or before, or otherwise involving, any Governmental Body
or arbitrator.
"REAL PROPERTY LEASES" -- The lease of the New York Real Property and the
New Jersey Real Property by the Sellers to the Companies which leases shall be
for a period of five years commencing as of the Closing Date and shall be
guaranteed by the Buyer, in the form of lease and guaranty as set forth in
Schedule 1.01(a) with respect to the lease of the New York Real Property, and as
set forth in Schedule 1.01(b) with respect to the lease of the New Jersey Real
Property.
"REAL PROPERTY OPTIONS" -- The Option Agreement dated as of the Closing
Date whereby the Buyer is given the option to purchase from the Sellers the New
York Real Property and the New Jersey Real Property as set forth in Schedule
1.01.(c) and 1.01(d) respectively.
"RELATED PERSON" -- with respect to a particular individual:
(a) each other member of such individual's immediate Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's immediate Family;
(c) any Person in which such individual or members of such individual's
immediate Family hold (individually or in the aggregate) a Material
Interest; and
(d) any Person with respect to which such individual or one or more
members of such individual's immediate Family serves as a director,
officer, partner, member, executor, or trustee (or in a similar capacity).
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With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control
with such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, member,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material Interest;
(e) any Person with respect to which such specified Person serves as a
partner, manager or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or (c).
For purposes of this definition, (a) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse, (iii) any other natural
person who is related to the individual or the individual's spouse as a
mother, father, brother or sister, and (iv) any other natural person who
resides with such individual, other than a natural person employed by or
rendering services for consideration to such individual or his/her family
and (b) "Material Interest" means direct or indirect beneficial ownership
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended) of voting securities or other voting interests representing at
least 5% of the outstanding voting power of a Person or equity securities
or other equity interests representing at least 5% of the outstanding
equity securities or equity interests in a Person.
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"REPRESENTATIVE" -- with respect to a particular Person, any director,
officer, manager, employee, agent, consultant, advisor, or other representative
of such Person, including, but not limited to, legal counsel, accountants, and
financial advisors.
"SETTLEMENT DATE" -- the date which shall be five business days after the
date on which the Buyer shall complete the sale of the Senior Notes.
"SELLERS" -- Thomas A. Denney and Marlene C. Denney.
"SENIOR NOTES" -- Senior secured notes of the Buyer which may be offered
by the Buyer under such terms and conditions as it shall determine, for an
aggregate amount of not less than $30 Million.
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"SHARES" -- All of the issued and outstanding shares of common stock, and
any other securities representing an equity interest, or the right to acquire an
equity interest, in the Companies.
"SUBSIDIARY" -- with respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to elect
(either directly or indirectly) a majority of that corporation's or other
Person's board of directors or similar governing body, or otherwise having the
power to direct (either directly or indirectly) the business and policies of
that corporation or other Person (other than securities or other interests
having such power only upon the happening of a contingency that has not
occurred) are held by the Owner or one or more of its Subsidiaries.
"TAX" -- any tax however denominated, including any interest, penalties or
other additions to tax that may be payable in respect thereof, imposed by any
Governmental Body, including, without limitation, all income or profit taxes,
payroll and employee withholding taxes, unemployment insurance, social security
taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise taxes,
gross receipts taxes, business license taxes, occupation taxes, real and
personal property taxes, stamp taxes, environmental taxes, transfer taxes,
workers' compensation, Pension Benefit Guaranty Corporation premiums and any
other governmental charges, and other obligations of the same or of a similar
nature to any of the foregoing, required to be paid, withheld or collected.
"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"THREAT OF RELEASE" -- a likelihood of a Release that will under
applicable Environmental Law require action in order to prevent or mitigate
damage to the Environment that may result from such Release.
ARTICLE II
PURCHASE AND SALE
2.01 PURCHASE AND SALE SHARES. Upon the terms and subject to the conditions
of this agreement and in consideration of the Purchase Price, Sellers
shall sell, assign, transfer and deliver to Buyer the Shares, and Buyer
shall purchase from Sellers and take delivery of the Shares, as provided
herein.
2.02 PURCHASE PRICE. (a) The aggregate purchase price ("Purchase Price")
for the Shares shall be $21,726,772 ("Base Purchase Price") subject to
the following post closing adjustments:
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(i) In the event that the amount of combined loss ("Loss") incurred by
the Companies in the period of January 1, 1997 through the Closing Date
shall exceed the sum of (a) 105% of the amount of Loss incurred for the
corresponding period in 1996; and (b) $100,000; then the Base Purchase
Price shall be reduced by the difference between (a) the Loss incurred
in the period of January 1, 1997 through the Closing Date; and (b) the
sum of 100% of the Loss incurred for the corresponding period in 1996
and $100,000. Profit on sale of leased vehicles, (as defined in
subsection (ii) hereof) and expenses and taxes incurred as a result of a
338(h)10 election shall not be included in the computation of Loss or
gain in the period from January 1, 1997 through the Closing Date
provided that in the event such residual value shall exceed $2,000,000
the amount thereof in excess of $2,000,000 shall offset (to the extent
of such excess) any downward adjustment of the Base Purchase Price
otherwise provided in this paragraph.
(ii) In the event that the aggregate residual value ("Residual Value")
of vehicles owned by Jersey and Central and leased to third parties
(following the end of current lease terms with respect to such vehicles)
shall be less than $1,500,000, the Base Purchase Price shall be reduced
by the difference between $1,500,000 and such Residual Value. The
Residual Value of all such leased vehicles shall be based upon the sales
price received by the Companies following the end of the lease terms for
such vehicles. In the event of a default and repossession of a leased
vehicle, the Residual Value for such vehicle shall equal the sales price
received by the Companies less the remaining balance of unpaid lease
payments for such vehicle.
(iii) In the event that the Companies shall prepay any Long Term debt
within a period of five days after the Settlement Date and shall incur
prepayment penalties with respect to any such prepayment, the Base
Purchase Price shall be reduced by one-half of the amount of such
prepayment penalties.
(iv) The adjustment to the Base Purchase Price under subsections (i)
and (ii), if any, shall be paid by Sellers to Buyer within ten business
days after written notice from Buyer of the determination of Loss and
Residual Value which determination shall be made in accordance with
Article 2.02(b). The adjustment to the Base Purchase Price under
subsection (iii) shall be remitted by the Sellers to the Buyer within
five business days following notice of any such prepayment and
prepayment penalty.
(b) The determination of Residual Value and Loss as provided for in
Section 2.02(a) shall be made jointly by Nathan Schlenker ("Schlenker")
on behalf of Buyer and Alexander S. Pasquale ("Pasquale") on behalf of
Sellers. In the event Schlenker and Pasquale shall be unable to reach
agreement on any of such items, such items shall be determined by Steven
Golden of the firm of Mahoney & Cohen & Company, CPA, P.C.,
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111 West 40th St., New York, New York 10018 (the "Mediator") or in the
event of his unavailability, by any other accountant designated by the
managing partner of such firm. The Buyer and the Sellers shall provide
the Mediator with all information relevant to the issues to be resolved
and shall instruct the Mediator to make a determination of such issues
within 15 days of the submission of such information. Such
determination shall be final and binding upon Buyer and Sellers. The
expense of such Mediator shall be shared equally by Buyer and Sellers.
Following such determination, the Buyer shall provide the Sellers with
written notice of the adjustments to the Base Purchase Price as required
under Article 2.02(a).
2.03 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be payable on the
Settlement Date to Sellers in the following proportions: ___% to Thomas
A. Denney and ___% to Marlene C. Denney; and shall be paid by wire
transfer to an account or accounts designated by Sellers in writing at
least five days before the Settlement Date.
2.04 CLOSING. (a) Subject to satisfaction of the conditions herein, the
consummation of the purchase and sale of the Shares and the other
transactions contemplated hereby (the "Closing") shall take place at the
offices of Silverman, Collura, Chernis & Balzano, P.C., 381 Park Avenue
South, New York, New York 10016 on July 1, 1997 .
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SELLERS
Each Seller warrants for himself or herself and the Companies represent and
warrant to Buyer as follows:
3.01. ORGANIZATION- CHARTER AND BY-LAWS. Central is a corporation duly
organized, validly existing and in good standing under the laws of the
State of New York. Jersey is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey.
Each of Central and New Jersey has the corporate power and authority to
own and lease its properties, conduct its business, to enter into this
Agreement and the Contemplated Transactions and perform its obligations
hereunder. Each of the Companies has furnished to Buyer a complete and
correct copy of its Organizational Documents, each as amended to date,
each of which is in full force and effect. Neither Central nor Jersey
is in violation of any of the provisions of their respective
Organizational Documents except where such violations would not, taken
as a whole, have a material adverse effect on the business of the
Company.
3.02. AUTHORIZATION AND ENFORCEABILITY. This Agreement has been duly executed
and delivered by, and when executed and delivered by Sellers shall
constitute, the legal, valid and binding obligation of Sellers,
enforceable against them in accordance with their respective terms,
subject to bankruptcy, insolvency, reorganization, moratorium and
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]other laws now or hereafter in effect relating to creditors' rights,
and equitable principles.
3.03. SHARES; CAPITALIZATION. (a) The authorized capital stock of the
Companies (the "Shares") consists solely of the following:
<TABLE>
<CAPTION>
AUTHORIZED SHARES SHARES SHARES
SHARES OF ISSUED AND OWNED BY OWNED BY
COMPANY COMMON STOCK OUTSTANDING THOMAS DENNEY MARLENE DENNEY PAR VALUE
------- ------------ ----------- ------------- -------------- ---------
<S> <C> <C> <C> <C> <C>
Central 200 100 50 50 No Par
Jersey 1,000 1,000 400 600 $1.00
</TABLE>
(b) None of the Shares are held in treasury. All of the Shares are
owned by Sellers and will be conveyed to Buyer free and clear of any and
all liens, claims or encumbrances. All of the Shares are validly issued,
fully paid and nonassessable. There are no options, warrants or other
rights, agreements, arrangements or commitments of any character to
which either of the Companies is a party or obligating either of the
Companies to issue or sell any shares of capital stock of, or other
equity interests in, either of the Companies. There are no outstanding
contractual obligations of either of the Companies to repurchase, redeem
or otherwise acquire any of the capital stock of either of the Companies
or to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any other entity. Neither of the
Companies is a party to any agreement granting registration rights to
any Person with respect to any equity or debt securities of either of
the Companies.
3.04. SUBSIDIARIES AND INVESTMENTS. Neither of the Companies owns any shares
of capital stock of or equity interests in any subsidiary, corporation,
partnership, joint venture or other entity. Each Seller warrants for
himself and herself that he or she has no interest in any business
enterprise (other than the Companies) which engages in any of the
businesses in which the Companies engage with the exception of (i) a
minority interest owned by Thomas A. Denney in TNT Bus Company, Inc.
which is engaged in school bus transportation services in the school
districts identified in schedule 3.04; and (ii) a minority interest
owned by the Thomas A. Denney in Southern New York Equity Corp. which is
not currently actively engaged in any business.
3.05. QUALIFICATION. Neither of the Companies is required to qualify as a
foreign corporation in any jurisdiction. Central has qualified to do
business in the State of New Jersey.
3.06. NO VIOLATION OF LAWS OR AGREEMENTS; CONSENTS. None of the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby or thereby will: (i) contravene any provision of the
Organizational Documents of the Companies, (ii) result in an event of
default (or an event that would, with the passage of time or the giving
of notice or both, constitute an event of default) under the terms of
any material indenture, mortgage or other material Contract to which
either of the
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Companies is a party, or (iii) violate any law or violate any judgment,
Order or Legal Requirement to which Sellers or the Companies is subject.
No material consent which has not been received or which will not be
obtained prior to closing is required in connection with the execution
and delivery by Sellers and the Companies of this Agreement and the
completion of the Contemplated Transactions.
3.07. FINANCIAL STATEMENTS. Attached hereto as Schedule 3.07(a) are the
balance sheets, income statements, statements of retained earnings and
statements of cash flows for each of the Companies at December 31, 1996,
and for the year then ended (the "Financial Statements). The Financial
Statements (i) were prepared in accordance with GAAP; and (ii) present
fairly the financial condition, results of operations and cash flows of
the Companies as of the dates thereof or for the periods covered
thereby.
3.08. ABSENCE OF UNDISCLOSED LIABILITIES. The Companies have no liability or
obligation which would be required to be reflected on the Financial
Statements and would have a material adverse effect on the business of
the Companies, except liabilities (a) referred to in this Agreement or
the schedules attached hereto; (b) reflected or reserved against in the
Financial Statements or the notes thereto: (c) not required under GAAP
to be included or reflected in the Financial Statement; (d) with respect
to matters otherwise addressed by any of the representations, warranties
or covenants made by Sellers and the Companies in this Agreement; (e)
covered (less applicable deductibles) by an insurance company with a
rating reasonably acceptable to Buyer, indemnification, contribution or
comparable arrangements or (f) incurred in the ordinary course of
business after the Balance Sheet Date, including normal accruals and
adjustments.
3.09. GUARANTIES. Schedule 3.09 hereto sets forth any guaranties or repurchase
agreements made by or on behalf of the Companies as well as any letters
of credit or deposits posted pursuant to any agreements described in
Schedule 3.09.
3.10. NO CHANGES. Except as set forth on Schedule 3.10 since the Balance
Sheet Date, the Companies have conducted its business only in the
Ordinary Course of Business. Without limiting the generality of the
foregoing sentence, since the Balance Sheet Date, except as disclosed in
this Agreement or the schedules hereto, there has not been any: (i)
material uninsured damage to any property owned or leased by the
Companies; (ii) labor strike; (iii) declaration or payment of any
dividend or redemption of any shares of capital stock, except the
Permitted Dividends; (iv) increases in the salaries or bonuses of any
employee of the Companies outside of the ordinary course of business or
payment of any bonuses to the Sellers or other officers of the
Companies; (v) capital expenditures or other asset acquisition or
expenditure out of the ordinary course of business; (vi) material change
in any Company plan described in Section 3.22; (vii) disposition of any
asset other than in the ordinary course of business; (viii) payment,
prepayment or discharge of any material liability other than in the
ordinary course of business; (ix) write-offs or write-downs of any
assets of the Companies out of the ordinary course of business, except
there shall be no write offs or write downs of receivables outstanding
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as of December 31, 1996 under any circumstances without Buyer's prior
written consent; (x) change in the Board of Directors or management of
the Companies; (xi) change in the Companies' method of accounting; (xii)
material change in the operations of the Companies; (xiii) issuance or
sale of stock of the Companies or options to purchase stock of the
Companies; (xiv) contract entered into by the Companies which is
material to its operations; (xv) any material encumbrance attaching to
assets of the Companies; (xvi) any prepayment of Long Term Debt (xvii)
any agreement or commitment to do any of the foregoing.
3.11. TAX MATTERS. Jersey is and has been since its initial year of operation,
an "S" corporation as defined in 1361(a) of the IRC. Central elected
Sub Chapter S treatment commencing in calendar year 1987. Central New
York is not subject to any tax for so called "built-in gain" under the
IRC as a result of such election. The Companies have duly filed with
the appropriate federal, state and local governmental agencies all Tax
Returns and reports which are required to be filed, and have paid in
full, or made adequate provision for, all Taxes, interest, penalties.
assessments and deficiencies owed by it. The income tax returns listed
on Schedule 3.11 hereto are all of the income tax returns filed by each
of the Companies for the last 3 years. Adequate accrual has been made in
the Financial Statements for all the accrued and unpaid federal, state
and local Taxes (including interest and penalties) of the Companies for
the period then ended whether or not yet due and payable and whether or
not disputed. The Companies have not executed or filed with the IRS or
any other taxing authority, any agreement extending the period for
assessment or collection of any taxes. In the last five tax years none
of the Tax Returns of the Companies have been audited by any
governmental agency and the Companies have not received notice of any
intention to audit any of such returns. The Companies are not a party
to any pending action or Proceeding, nor to the knowledge of Sellers, is
any action or Proceeding threatened, by any Governmental Body for
assessment or collection of taxes, and no claim for assessment or
collection of taxes, has been asserted against the Companies.
3.12. REAL PROPERTY. Annexed hereto as Schedule 3.12 is a copy of each lease
for Real Property to which the Companies are a party and each lease for
premises ("Premises") itemized by the Companies in their respective
operations together with a summary of all such leases. The Companies do
not own title to any Real Property. Neither the Companies nor the
Sellers as lessors under any of the foregoing leases is in default under
any agreement, Contract or lease relating to the Premises. There are no
other leases or subleases affecting the Premises other than the Leases
described in Schedule 3.12. The leases between the Sellers and the
Company for the New York Real Property and the New Jersey Real Property
shall be terminated effective as of the Closing Date without any further
liability or obligation on the part of the Companies under such leases.
3.13. TITLE TO AND CONDITION OF PROPERTIES AND ASSETS. All the motor vehicles
owned or leased by the Companies, all machinery and equipment and
fixtures owned or leased by the Companies are described in Schedule 3.13
hereto. Except as set forth in Schedule
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3.13 and except for Ordinary Course of Business leases of photocopiers,
fax machines, postage machines, telephones and other office equipment
used in the business of the Companies ("Office Equipment Leases"), the
Companies have good and marketable title to all of its properties and
assets including those reflected in the Financial Statements and
Schedule 3.13 hereto, subject to no mortgage, pledge, lien, conditional
sale agreement, security interest, Encumbrance or other charge. Except
as disclosed in Schedule 3.13, the tangible assets of the Companies,
including all vehicles, machinery and equipment are, taken as a whole,
in working order and operational, ordinary wear and tear excepted, and
conform in all material respects with all applicable material Laws,
ordinances and regulations and all applicable safety laws, regulations,
including but not limited to all vehicle requirements and regulations of
any Governmental Body applicable to school buses.
3.14. RECEIVABLES. Schedule 3.14 sets forth a complete list of all of the
trade, notes, and other accounts receivable as of December 31, 1996 and
as of the Closing Date of each of the Companies as of the date of this
Agreement (collectively, the "Receivables"). All of the Receivables
arose in the ordinary course of business and of the Companies. Each
Seller warrants for himself or herself that he or she has received no
notice that any portion of the Receivables is subject to counterclaim or
set-off or is otherwise in dispute nor is Sellers aware of any claims
which would give rise to counterclaims or set-off.
3.15. NO PENDING LITIGATION OR PROCEEDINGS. There are no actions, suits,
investigations, claims or proceedings of any nature or kind whatsoever
pending or, to the best knowledge of Sellers and the Companies,
threatened which would have a material adverse effect upon the
Companies, the Shares, the Contemplated Transactions or the material
Contracts of the Companies, at law or in equity, by or before any
Governmental Body. There are presently no material outstanding
judgments, decrees or orders of any governmental body against or
affecting the Companies. Schedule 3.15 lists all actions, suits,
investigations, claims or proceedings pending, or to the knowledge of
Sellers and the Companies, threatened against or affecting the
Companies.
3.16. CONTRACTS. Schedule 3.16 identifies each material lease (except Office
Equipment Leases and contracts for the sale of less than twenty
vehicles), contract, indenture, mortgage or other agreement to which
the Companies are a party, each of which is a legal, valid and binding
obligation of the Companies and is in full force and effect.
3.17. CONTRACT COMPLIANCE. Except as set forth on Schedule 3.17(b), the
Companies are not in default in any material respect under any material
lease, contract, indenture, mortgage or other agreement (collectively,
the "Contracts"). Each Seller warrants for himself or herself that to
such Seller's knowledge that except as set forth in Schedule 3.17(b), no
other party to any of the Contracts is in default in any material
respect thereunder.
3.18 SCHOOL BUS TRANSPORTATION CONTRACTS. (a) Attached hereto as Schedule
3.18(a) is a copy, true and complete in all material respects, of each
transportation contract ("Transportation Contracts") between the
Companies and any entity serviced by the Companies together with all
extensions, and amendments thereto. Schedule 3.18(b) states
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<PAGE>
the original contract rate and the current monthly rate of compensation
payable pursuant to each Transportation Contract. Each Transportation
Contract as of the date hereof, has been extended through the period
ending as set forth on Schedule 3.18(b) pursuant to an agreement
extending such contract which has been duly approved by the contracting
entity and providing for an increase in the rate of compensation for the
period of such extension as indicated on such schedule.
3.19. PERMITS. The Companies' hold all material permits, licenses and
franchises required under Legal Requirement and Contracts in connection
with the operation of its businesses ("Permits"). To Sellers' and the
knowledge of the Companies, the consummation of the Contemplated
Transaction, the Companies will not alter or impair any such Permits.
The Companies are currently in compliance in all material respects with
all laws and Orders applicable to the Permits.
3.20. TRANSACTIONS WITH RELATED PARTIES. Neither Sellers nor any officer or
director or and Related Persons thereof, of the Companies is party to
any agreement with the Companies, is indebted to the Companies, or is
due any debt or obligation from the Companies, except as set forth on
Schedule 3.20.
3.21. LABOR MATTERS. (a) To the knowledge of Sellers and the Companies, there
are presently no (i) material violations of any Federal, state or local
statutes, laws, ordinances, rules, regulations, Orders or directives
with respect to the employment of individuals by, or the employment
practices or work conditions of, or the terms and conditions of
employment, wages and hours of the Companies; (ii) unfair labor practice
or other unlawful employment practice and no charges of unfair labor
practices or other employee-related complaints pending or threatened
against the Companies before the National Labor Relations Board, the
Equal Employment Opportunity Commission, the Occupational Safety and
Health Review Commission, the Department of Labor or any other Federal,
state, local or other governmental authority; (iii) strikes, pickets,
slowdowns or work stoppages or organizational attempts actually pending,
threatened against or involving the Companies; or (d) material issues
with respect to union representation pending or threatened with respect
to the employees of the Companies or any Subsidiary.
(b) Annexed hereto as Schedule 3.21 is a copy of each collective
bargaining agreement and employment contract to which either of the
Companies is a party.
3.22. INSURANCE. Schedule 3.22 identifies all insurance policies with respect
to which the Companies are the owner, insured or beneficiary. No notice
of cancellation or nonrenewal has been received by the Companies in
respect of such policies. The Companies have not received notice of
cancellation of such policies and the Companies have made timely notice
of all material claims or occurrences required to be reported in
accordance with the terms of such policies.
3.23. EMPLOYEE BENEFIT MATTERS.
(a) Schedule 3.23 lists (i) all employee benefit plans (as defined
under Section 3(3) of ERISA and all bonus, stock option, stock purchase,
restricted stock, incentive, deferred compensation, retiree medical or
life insurance, supplemental retirement,
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severance or other employee benefit plans, programs or arrangements, and
all employment, termination or severance agreements to which either of
the Companies is a party, with respect to which either of the Companies
have any present or future obligation to make payments or to contribute,
whether voluntary, contingent or otherwise, or which are maintained by
either of the Companies for the benefit of any current or former
employee, officer or director of the Companies, (ii) any plan in respect
of which the Companies will incur liability under Section 4212(c) of
ERISA and (iii) any contracts, arrangements or understandings between
the Companies and any of its employees, including, without limitation,
any contracts, arrangements or understandings relating to the sale of
the Companies (collectively, the "Plans"). The Companies have furnished
Buyer with a complete and accurate copy of each Plan including, without
limitation, (i) a copy of each trust or other funding arrangement, (ii)
each summary plan description and summary of material modifications,
(iii) the most recently filed IRS Form 5500, (iv) the most recently
received IRS determination letter for each such Plan, and (v) the most
recently prepared actuarial report and financial statement in connection
with each such Plan, if applicable. Except as disclosed on Schedule
3.23, there are no other employee benefit plans (as defined under
Section 3(3) of ERISA), whether formal or informal, whether in writing
or not, to which either Company is a party, with respect to which either
Company has any obligation or which are maintained, contributed to or
sponsored by either Company for the benefit of any current or former
employee, officer or director of such Company.
(b) Except as set forth in Schedule 3.23, none of the Plans is a
multi-employer plan (within the meaning of Sections 3(37) or 4001(a)(3)
of ERISA), a single employer pension plan (within the meaning of Section
4001(a)(15) of ERISA) or a plan intended to be qualified under Section
401(a) or 401(k) of the Code. None of the Plans provides for the payment
of separation, severance, termination or similar-type benefits to any
person or obligates the Companies to pay separation, severance,
termination or similar type benefits solely as a result of any
transaction contemplated by this Agreement or as a result of a "change
in control", within the meaning of such term under Section 280G of the
Code. None of the Plans provides for or promises retiree medical,
disability or life insurance benefits to any current or former employee,
officer or direct of the Companies, except to the extent required by
law.
(c) Except as disclosed on Schedule 3.23, the Companies and each
Seller warrants for himself and herself that to their respective
knowledge, each Plan is now and always has been operated in all material
respects in accordance with the requirements of all applicable laws,
including, without limitation, ERISA and the Code, and, to the knowledge
of Sellers, all Plan "fiduciaries" (within the meaning of Section 3(21)
of ERISA) have always acted in all material respects in accordance with
the provisions of all applicable laws, including, without limitation,
ERISA and the Code. The Companies have performed all material
obligations required to be performed by it under, is not in any material
respect in default under or in violation of, and has no knowledge of any
default or violation by any party to, any Plan. Except as disclosed on
Schedule 3.22, no legal action, suit or claim is pending or threatened
with respect to any Plan (other than claims for benefits in the ordinary
course).
3.24. ENVIRONMENTAL MATTERS.
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(a) All facilities and property presently leased by the Companies
have been, and continue to be, operated by the Companies in material
compliance with all Environmental Law including, but not limited to, the
Comprehensive Environmental Response Compensation Liability Act of 1980,
as amended ("CERCLA") and the Resource Conservation and Recovery Act
("RCRA") and applicable New York State and New Jersey State law
equivalents of CERCLA and RCRA during the period in which such property
was leased and operated by the Companies.
(b) The Companies have not received notice of any pending or
threatened claims, complaints or requests for information with respect
to any alleged violation of any Environmental Laws.
(c) There have been no releases of Hazardous Substances in violation
of Environmental Law, as defined in Section 101(14) of CERCLA, arising
out of or occurring in connection with the operation of the business of
the Companies that give rise to necessary costs of response at, on, from
or under any property now or previously owned or leased by the Companies
during the period in which any such property was owned or leased by the
Companies, which alone or in the aggregate would have a material adverse
effect on the Companies.
(d) The Companies have been issued and are in material compliance
with all permits, certificates, approvals, licenses and registrations
necessary under applicable Environmental Laws during the period of the
operation of its business.
(e) The Companies have not received any orders, administrative
consent orders or notices of violation relating to violation of
Environmental Laws or release of Hazardous Substances.
(f) The Companies have not received notice that property presently
leased, or previously owned or leased, by the Companies are listed or,
to the knowledge of Sellers or the Companies, proposed for listing in
the National Priorities List created pursuant to CERCLA or on the
Comprehensive Environmental Response Compensation Liability Information
System.
(g) To the knowledge of Sellers and the Companies, the Companies have
not transported or arranged for the transportation of any Hazardous
Substances to any location which is listed on the National Priorities
List or any similar state list, nor has Sellers received notice of
pending or threatened claims as a result of transporting or arranging to
transport Hazardous Substances to any such location.
(h) The Companies have not received notice of pending or threatened
claims against the Companies arising out of any its operations, actions
or inaction relating to any previously divested property, whether or not
the subject of any indemnity, under Environmental Laws or involving
Hazardous Substances.
3.25. BANKING RELATIONS. All of the bank accounts letters of credit, loans and
other transactions which the Companies have with any banking institution
are described in Schedule 3.25 hereto, indicating with respect to each
of such arrangement the type of
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arrangement maintained and the person or persons authorized to act on
behalf of the Companies in respect thereof and identification of each
account maintained by the Company. The Companies have not given any
person a power of attorney to act on its behalf with respect to such
arrangements.
3.26. BROKERS AND FINDERS FEES. Neither the Sellers nor the Companies have
employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in connection with the
Contemplated Transactions.
3.27 LONG TERM DEBT. The aggregate amount of Long Term Debt outstanding as
of the Closing Date is not greater than $4,773,228.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.01. ORGANIZATION; CORPORATE POWER AND AUTHORITY: AUTHORIZATION. Buyer is a
corporation duly organized, validly existing and in good standing under
the laws of New York. Buyer has full legal right, power and authority to
make, execute, deliver and perform this Agreement. The execution,
delivery and performance by Buyer of this Agreement has been duly
authorized by all necessary action on the part of Buyer. This Agreement
has been duly executed and delivered and constitutes the legal, valid
and binding obligations of Buyer, enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws now or hereafter in effect relating to
creditors' rights, and principles of equity.
4.02. NO VIOLATION OF LAWS OR AGREEMENTS. None of the execution and delivery
of this Agreement, or the consummation of the Contemplated Transactions
will: (i) contravene any provision of the Organizational Documents of
Buyer, (ii) result in an event of default (or an event that would, with
the passage of time or the giving of notice or both, constitute an event
of default) under any of the terms of any material indenture, mortgage
or other contract to which Buyer is a party, or (iii) violate any law or
violate any judgment or order of any governmental body to which Buyer is
subject. No material consent is required in connection with the
execution and delivery by Buyer of this Agreement.
4.03. INVESTMENT REPRESENTATION. Buyer is acquiring the Shares for its own
account with the intention of holding such Shares for purposes of
investment, and not as a nominee or agent for any other party, or with a
view to the resale or distribution of any of the Shares, and Buyer has
no intention of selling the Shares or any interest therein in violation
of the federal securities laws or any applicable Legal Requirement.
4.04 BROKERS AND FINDERS FEES. The Buyer has not employed any broker or
finder or incurred any liability for any brokerage fees, commissions or
finder's fees in connection with the Contemplated Transactions.
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4.05 Buyer shall use its reasonable efforts to consummate the sale of the
Senior Notes on or before September 30, 1997 and to obtain all consents
and approvals required in connection therewith.
ARTICLE V
CERTAIN COVENANTS
5.01 CONDUCT OF BUSINESS PENDING CLOSING. From and after the execution of
this agreement and until the Closing Date, unless Buyer shall otherwise
consent in writing:
(i) ORDINARY COURSE. The Companies shall, and Sellers shall cause
the Companies to, conduct their affairs in the Ordinary Course of
Business and consistent with past practice. The Companies shall
maintain their property, equipment and other assets consistent with
past practice and shall comply in all material respects in a timely
fashion with the provisions of all the Contracts and their other
agreements and commitments. The Companies shall use their reasonable
efforts to keep their business organization intact, keep available the
services of their present employees and preserve the goodwill of their
suppliers, customers and others having business relations with it.
The Companies shall maintain in full force and effect the policies of
insurance listed in Schedule 3.22 hereto, subject only to variations
required by the ordinary operations of their business, or else shall
obtain, prior to the lapse of any such policy,substantially similar
coverage with insurers of recognized standing. Notwithstanding the
foregoing the Companies may make loans to the Sellers (which do not
exceed $100,000 per month) provided that any such loans shall be
repaid to the Companies on or before the Settlement Date.
(ii) TRANSACTIONS. The Companies shall not: (i) amend their
Organizational Documents; (ii) change is authorized or issued capital
stock; (iii) enter into any contract or commitment the performance of
which may extend beyond the Closing, except those made in the Ordinary
Course of Business or as contemplated by this Agreement; (iv) fail to
pay any material income Taxes or any other liability or charge when
due (other than Taxes contested in good faith by appropriate
proceedings); or (v) make, change or revoke any tax election or make
any agreement or settlement with any taxing authority.
(iii) ACCESS, INFORMATION AND DOCUMENTS. Sellers and the Companies
shall give to Buyer and to Buyer's employees and representatives
access during normal business hours to all of the properties, books,
tax returns, Contracts, commitments, records, officers, personnel and
accountants of the Companies and shall furnish to Buyer all such
documents and copies of documents and all information with respect to
the properties, liabilities and affairs of the Companies and the
Subsidiaries as Buyer may reasonably request.
(iv) Notwithstanding anything contained herein to the contrary, the
Companies may sell the vehicles set forth on Schedule 5.01(iv) to the
Sellers and/or affiliates of the Sellers for the cash purchase price
provided in such schedule.
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5.02. FULFILLMENT OF AGREEMENTS. Each party shall use its reasonable efforts
to cause all of the conditions to the obligations of the other under
Article V to be satisfied on or prior to the Closing Date and shall use
its best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this
Agreement.
5.03. PUBLICITY. Sellers and Buyer shall not issue any press release or
otherwise make any announcements to the public with respect to this
Agreement without the prior written consent of the other, except as
mutually agreed by Sellers and Buyer or as required by law.
5.04. LEGENDS. It is understood that the certificates evidencing the Shares
shall bear the following legends:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AND THESE SECURITIES MAY NOT BE SOLD, ENCUMBERED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT, AND , IF AN
EXEMPTION SHALL BE APPLICABLE, THE HOLDER SHALL HAVE DELIVERED AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED.
5.05. DIVIDEND. Prior to the Settlement Date, the Companies shall neither pay
nor declare any dividends with the exception of Permitted Distributions.
5.06. TAX MATTERS.
5.06.1 PREPARATION OF RETURNS The parties shall cause the Companies to
file their tax return and pay taxes (with the Buyer being obligated to
cause the Company to pay corporate level taxes resulting from the
338(h)10 election), if any, for its fiscal year which begins on January
1, 1997 and ends on June 30, 1997, subject to extensions obtained by or
on behalf of the Companies, and Buyer shall cause the Companies to
retain an accountant designated by Sellers and approved by Buyer (the
"Accountant") to prepare such returns. Buyer agrees that Pasquale and
Powers, LLP is acceptable to it for such purpose. The Sellers shall be
solely responses for the fees of the Accountant for such purpose.
5.06.2 338(H)(10) ELECTION With respect to the acquisition of the
Shares hereunder, Buyer and Sellers shall make a timely election under
Section 338(g) of the IRC and Sellers and Buyer shall jointly make an
election under Section 338(h)(10) of the Code (and any corresponding
elections under state or local tax law) (collectively, a "Section
338(h)(10) Election"). Sellers and Buyer shall (i) take, and cooperate
with each other to take, all actions necessary and appropriate
(including filing such forms, returns, elections, schedules and other
documents as may be required) to effect and preserve a timely Section
338(h)(10) Election in accordance with Section 338 of the Code and the
Regulations thereunder, or any successor provisions as promptly as
practicable following the Closing Date, but not later than the date
which is the latest date for making such
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Section 338(h)(10) Election, and from time to time thereafter; and (ii)
shall report the sale of the Shares pursuant to this Agreement
consistent with the Section 338(h)(10) Election and shall take no
position contrary thereto or inconsistent therewith in any Tax Return,
any discussion with or proceeding before any taxing authority, or
otherwise. The fair market value of the fixed assets of the Companies
for purpose of the 338(h)(10) Election shall be reasonably determined by
the Buyer.
5.06.3 TAX ESCROW
(a) Prior to the Settlement Date, Schlenker and Pasquale shall
jointly (i) estimate an amount (the "Election Amount") which shall equal
the difference between Federal and State income taxes which the Sellers
would be required to pay had no election been made under section
338(h)(10), and the Federal and State income taxes the Sellers will be
required to pay based upon the making of such election; and (ii)
estimate a gross up of the Election Amount which when added to the
Election Amount will make the Sellers whole on the additional income
taxes payable by Sellers on the Election Amount (the "Gross Up Amount")
with the parties agreeing that the sum of the Election Amount and the
Gross Up Amount shall constitute an increase in the Base Purchase Price
(the "Estimated Purchase Price Increase").
(b) The Estimated Purchase Price Increase shall be deposited by Buyer
with Silverman, Collura, Chernis & Balzano, P.C. ("SCCB") who shall hold
same in escrow in an interest bearing account pursuant to the terms of
an escrow agreement in the form of Schedule 5.06.3. Such escrow
agreement shall provide INTER ALIA that the Estimated Purchase Price
Increase as adjusted in accordance with section 5.06.3(c) (the "Adjusted
Purchase Price Increase) shall be paid to Sellers within five days after
receipt of notice of such adjustment;
(c) The procedure for determining the Adjusted Purchase Price Increase
shall be as follows: Pasquale shall provide Schlenker with copies of
the Federal and State income tax returns as filed by each of the Sellers
for calendar year 1997; In the event that such tax returns and/or the
tax returns for the Companies for the period ending June 30, 1997
(collectively the "Tax Returns") shall indicate a rate of taxation or
basis for taxation which is different from the rate or basis applied by
Schlenker and Pasquale in the estimation of either the Election Amount
or the Estimated Purchase Price Increase, Schlenker and Pasquale shall
adjust their determination of the Election Amount and Estimated Purchase
Price Increase accordingly. Within ten business days of Schlenker's
receipt of such tax returns, Schlenker and Pasquale shall jointly serve
notice (the "Adjustment Notice") upon SCCB to disburse the amount of the
Adjusted Purchase Price Increase (or the amount held in escrow together
with accrued interest if such aggregate amount is less than the Adjusted
Purchase Price Increase) to the Sellers in the proportions set forth in
Article 2.03. In the event the aggregate amount disbursed from the SCCB
escrow shall be less than the Adjusted Purchase Price Increase, the
Buyer shall pay such difference to the Sellers in the proportions set
forth in Article 2.03 within 5 days after receipt of the Adjustment
Notice. In the event the Adjusted Purchase Price Increase is less than
the SCCB escrow balance, SCCB shall disburse any remainder of such
escrow together with accrued interest to the Buyer. In the event an
audit of the Tax Returns shall result in a determination by the IRS,
which determination, if known at the time of the Adjustment Notice,
would result in either an increase or decrease of the Adjusted
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Price Increase. Schlenker and Pasquale shall jointly determine (and
failing their joint determination, the Mediator shall determine) any
overpayment or underpayment of the Adjusted Purchase Price Increase and
notify the Buyer and the Sellers thereof. Within 30 days following such
notice the Buyer shall pay to the Sellers any such underpayment or the
Sellers shall pay to the Buyers any such overpayment as the case may be,
together with interest at the rate of 7% per annum.
(d) In the event Schlenker and Pasquale are unable to reach agreement
on any amount required to be estimated or determined hereunder, such
estimation or determination shall be made by the Mediator in accordance
with the procedure set forth in Article 2.02(b) and upon such
determination the Mediator shall serve the Adjustment Notice upon the
Buyer, the Seller and SCCB in the manner provided in this Agreement.
5.07 COVENANT NOT TO COMPETE.
(a) For a period of five (5) years from the Closing Date, each Seller
agrees for himself and herself only that he or she will not, directly or
indirectly, (i) engage in the school bus transportation business or any
business involving mass transportation of students for hire by motor
vehicle, or other means of conveyance, as a common carrier, contract
carrier, private carrier or otherwise, in New York or New Jersey and/or
in any other school district currently serviced by the Buyer or any of
its subsidiaries; (ii) engage in the school bus dealership business in
New York or New Jersey; (iii) solicit or endeavor to entice away from
the Companies, Buyer or any of its subsidiaries any Person
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who is, or was during the then most recent 6 month period, employed by
or associated with the Companies, Buyer of any of their subsidiaries;
(iv) solicit or endeavor to entice away from the Companies, Buyer or any
of its subsidiaries any person or entity who is, or was within the then
most recent 6 month period, a customer, client or prospect of the
Companies, the Buyer or any of its subsidiaries, or (v) be a member of a
partnership or stockholder, investor, creditor, officer, director,
employee, agent, associate or consultant of any person, partnership or
corporation which does any of the acts described herein; Buyer and each
Seller for himself and herself only acknowledge and agree that the
remedies available to the Companies and Buyer at law in the event of a
breach by Sellers of any of their covenants in this section 5.09 will be
inadequate, and Buyer and the Companies or any successor shall be
entitled to injunctive relief for the enforcement of this section 5.09,
in addition to all other remedies which may be available to Buyer or the
Companies.
(b) Notwithstanding the restrictions set forth in Article 5.07(a)(i),
Thomas A. Denney may continue to maintain a minority interest in TNT Bus
Company provided that he does not participate in the day to day
management of such company and further provided that upon the request of
the Buyer given during the term of his employment by the Companies he
shall use his reasonable best efforts to dispose of his interest in TNT
Bus Company for reasonable consideration.
(c) Each Seller covenants and agrees for himself and herself with
Buyer that he/she will not at any time, except in performance of their
obligations to Buyer hereunder, directly or indirectly, disclose any
secret or confidential information that they may learn or have learned
by reason of their association with the Companies. The term
"confidential information" includes information not previously disclosed
to the public or to the trade by the Companies' management, or otherwise
in the public domain, with respect to products, services, facilities,
applications and methods, trade secrets and other intellectual property,
systems, procedures, manuals, confidential reports, product or service
price lists, customer lists, technical information, financial
information, business plans, prospects or opportunities. Sellers confirm
that all confidential information is and shall remain the exclusive
property of the Companies. All business records, papers and documents
kept or made by Sellers relating to the business of the Companies shall
be and remain the property of the Companies.
(d) A portion of the Base Purchase Price, as provided for in Schedule
5.07(d) shall be allocated to each of the Sellers in consideration of
the covenants in this Section 5.07.
5.08 EMPLOYMENT OF THOMAS A. DENNEY. On the Closing Date the Companies shall
enter into a five year employment contract with Thomas A. Denney in the
form of agreement annexed hereto as Schedule 5.08.
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5.09 ACCOUNTS RECEIVABLE; OFFICER'S OBLIGATIONS.
(a) Following the Closing Buyer shall cause the Company to exercise
commercially reasonable efforts to collect all of the accounts
receivable. In the event that any account receivable other than
qualified receivables as defined herein, are not collected within six
months from the Closing Date, Sellers shall promptly pay to Buyer the
uncollected amount of such Receivables and thereupon Buyer shall assign
such Receivables to Sellers;
(b) The Receivable due from TNT Bus Service, Inc. in the approximate
amount of $377,029 and the Receivable due from Ridge Road Express, Inc.
in the approximate amount of $726,133 shall be treated as qualified
receivables ("Qualified Receivables") provided that the Companies prior
to, or within 30 days after the Closing Date, shall enter into an
agreement with each one of such accounts providing for payment of such
Qualified Receivables in equal monthly installments over a period of 18
months, to be evidenced by a promissory note bearing interest on the
principal balance at the rate of 11% per annum and providing for
acceleration of the principal balance in the event that the account
debtor defaults on the payment of any monthly installment after a 10 day
grace period, or does not remain current on its other obligations to
the Companies. Following 30 days written notice to Thomas Denney of a
default in payment of the promissory note for a Qualified Receivable,
Thomas Denney shall promptly pay to Buyer the uncollected amount of such
Qualified Receivable and thereupon Buyer shall assign such Qualified
Receivable to Thomas Denney;
(c) The payment by Sellers (if required) under subparagraph (a) and
(b) shall be Buyer's sole remedy under this Agreement with respect to
nonpayment of such Receivables or Qualified Receivables.
(d) On the Settlement Date all notes, payables and other obligations
of the Sellers to the Companies shall be paid and satisfied.
ARTICLE VI
CONDITIONS TO CLOSING; TERMINATION
6.01. CONDITIONS PRECEDENT TO OBLIGATION OF BUYER. The obligation of Buyer to
proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at Closing of the following conditions (any one
or more of which may be waived in whole or in part by Buyer at Buyer's
sole option):
(a) BRINGDOWN OF REPRESENTATIONS AND WARRANTIES: COVENANTS. Each of
the representations and warranties of Sellers contained in this
Agreement shall be true and correct in all material respects on and as
of the Closing Date, with the same force and effect as though such
representations and warranties had been made on, as of and with
reference to the Closing Date. Sellers shall have performed in all
material respects all
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of the covenants and complied with all of the provisions required by
this Agreement to be performed or complied with by it at or before the
Closing.
(b) LITIGATION. No statute, regulation or Order of any Governmental
Body shall be in effect that restrains or prohibits the Contemplated
Transactions or that would limit or adversely affect Buyer's ownership
of the Shares or control of the Companies, and there shall not have been
threatened, nor shall there be pending, (i) any action or proceeding by
or before any Governmental Body challenging the lawfulness of or seeking
to prevent or delay any of the Contemplated Transactions, or (ii) any
action, claim or proceeding which, if determined adversely to the
Companies, would have a material adverse effect on the business of the
Companies.
(c) CLOSING CERTIFICATE. Sellers shall have delivered a certificate,
dated the Closing Date, in such detail as Buyer shall reasonably
request, certifying to the fulfillment of the conditions set forth in
subparagraphs (a) and (b) of this Section 6.01.
(d) CLOSING DOCUMENTS. Sellers shall have delivered to the Escrow
Agent the other documents referred to in Section 6.03(a). All
agreements, certificates, opinions and other documents delivered by
Sellers or the Companies to the Escrow Agent hereunder shall be in form
and substance satisfactory to Buyer.
(e) CALAMITIES. There shall not have occurred and be continuing
between the date of this Agreement and the Closing Date (i) any general
suspension of, or limitation on prices for or trading in, securities on
any United States securities exchange, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any government or governmental,
administrative or regulatory authority or agency, domestic or foreign,
or other event that materially and adversely affects the ability of
Buyer to consummate the Contemplated Transactions hereby, or (iv)
commencement of a war or armed hostilities or other national or
international calamity directly involving the United States.
(f) BANKRUPTCY; INSOLVENCY; ETC. No proceeding shall have been
instituted or consented to by Sellers or the Companies seeking to
adjudicate it bankrupt or insolvent, or seeking liquidation, winding-up,
reorganization, arrangement, adjustment, protection, relief, or
composition of its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry
of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or any substantial part of
its property, and neither Sellers nor the Companies shall have taken any
action to authorize any such proceeding.
(g) NO MATERIAL ADVERSE EFFECT. No fact, event or condition
(financial or otherwise) shall have occurred with respect to the
Companies having, individually or in the aggregate, a Material Adverse
Effect on the Companies.
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(h) COMPLETION OF CERTIFIED FINANCIAL STATEMENT. The completion of
certification by BDO Seidman of financial statements for each of the
Companies for 1994, 1995 and 1996 and completion by the Companies of
unaudited statements for the 12 months and 6 months ended June 30, 1996
and 9 months ended March 31, 1997 and March 31, 1996. Buyer and Sellers
shall each pay one-half of (i) the accounting fees of BDO Seidman; and
(ii) the accounting fees of the Accountant which are incurred in
connection with such audit and financial statement preparation
(i) ENVIRONMENTAL WORK. Without limiting Sellers obligation under
Article VIII (Indemnification) Sellers shall be required to incur the
expense in order to complete and remedy the items set forth on Schedule
6.01(j) provided that, the Buyer on the Closing Date, shall assume the
first $100,000 of such expense.
(j) Sellers shall have delivered all documents required to be
delivered under Article 6.03(a).
6.02. CONDITIONS PRECEDENT TO OBLIGATION OF SELLERS. The obligation of Sellers
to proceed with the Closing under this Agreement is subject to the
fulfillment prior to or at Closing of the following conditions (any one
or more of which may be waived in whole or in part by Sellers at
Sellers's sole option):
(a) BRINGDOWN OF REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of
the representations and warranties of Buyer contained in this Agreement
shall be true and correct in all material respects on and as of the
Closing Date, with the same force and effect as though such
representations and warranties had been made on, as of and with
reference to the Closing Date. Buyer shall have performed all of the
covenants and complied in all material respects with all of the
provisions required by this Agreement to be performed or complied with
by it at or before the Closing.
(b) LITIGATION. No statute, regulation or order of any Governmental
Body shall be in effect that restrains or prohibits the Contemplated
Transactions, and there shall not have been threatened, nor shall there
be pending, (i) any action or proceeding by or before any Governmental
Body challenging the lawfulness of or seeking to prevent or delay any of
the Contemplated Transactions by this Agreement or the Other Agreements
or seeking monetary or other relief by reason of the consummation of
such transactions, or (ii) any action or proceeding which, if determined
adversely to Buyer, would have a material adverse effect on Buyer.
(c) CLOSING CERTIFICATE. Buyer shall have delivered a certificate,
dated the Closing Date, in such detail as Sellers shall request,
certifying to the fulfillment of the conditions set forth in
subparagraphs (a) and (b) of this Section 6.02.
(d) CLOSING DOCUMENTS. Buyers shall have delivered to the Escrow
Agent the other documents referred to in Section 6.03(b). All
agreements, certificates, opinions and other
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documents delivered by Buyer to Sellers hereunder shall be in form and
substance satisfactory to counsel for Sellers, in the exercise of such
counsel's reasonable professional judgment.
(e) CALAMITIES. There shall not have occurred and be continuing
between the date of this Agreement and the Closing Date (i) any general
suspension of, or limitation on prices for or trading in, securities on
any United States securities exchange, (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation by any government or governmental,
administrative or regulatory authority or agency, domestic or foreign,
or other event that materially and adversely affects the ability of
Sellers to consummate the Contemplated Transactions hereby, or (iv)
commencement of a war or armed hostilities or other national or
international calamity directly involving the United States.
(f) BANKRUPTCY; INSOLVENCY: ETC. No proceeding shall have been
instituted or consented. to by Buyer seeking to adjudicate it bankrupt
or insolvent, or seeking liquidation, winding-up, reorganization,
arrangement, adjustment, protection, relief, or composition of its debts
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official
for it or any substantial part of its property, and the Buyer shall not
have taken any corporate action to authorize any such proceeding.
(g) NO MATERIAL ADVERSE EFFECT. No fact, event or condition
(financial or otherwise) shall have occurred with respect to the
Companies having, individually or in the aggregate, a material adverse
effect on Sellers or the Companies.
(h) Buyer shall have delivered all documents required to be delivered
under Article 6.03(b).
6.03. DELIVERIES AND PROCEEDINGS AT CLOSING.
(a) DELIVERIES BY SELLERS. Sellers shall deliver or cause to be
delivered to the Escrow Agent at the Closing:
(i) Certificates representing the Shares duly endorsed in negotiable
form or accompanied by stock powers duly executed in blank.
(ii)Certificates of the appropriate public officials to the effect
that each of the Companies is a validly existing corporation in good
standing under the laws of their respective states of incorporation.
(iii)Incumbency and specimen signature certificates dated the Closing
Date, signed by the officers of the Companies and certified by their
respective Secretaries.
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(iv) Certificates of the respective Secretaries of the Companies (A)
setting forth all resolutions of the Board of Directors the Companies
authorizing the execution and delivery of this Agreement and the
performance by the Companies of the Contemplated Transactions.
(v) The opinion of legal counsel to Sellers and the Companies, in
substantially the form of Schedule 6.03(v).
(vi) Resignations effective as of the Settlement Date of all officers
and directors of the Companies in substantially the form of Schedule
6.03(vi) hereto.
(vii) The New York Real Property Lease and the New Jersey Real
Property Lease executed by Sellers in the form annexed hereto as
Schedules 1.01(a) and 1.01(b).
(viii) The Real Property Options executed by Sellers in the form
annexed hereto as Schedule 1.01(c) and 1.01(d).
(ix) The Employment contracts between the Companies and Thomas A.
Denney in the form set forth on Schedule 5.08.
(x) Such other documents necessary or appropriate to consummate the
Contemplated Transactions.
(b) DELIVERIES BY BUYER. Buyer shall deliver or cause to be delivered
to the Escrow Agent at the Closing:
(i) A certificate of the appropriate public official to the effect
that Buyer is a validly existing corporation in good standing
as a New York corporation.
(ii) A certificate of the Secretary of Buyer (A) setting forth all
resolutions of the Board of Directors of Buyer authorizing the
execution and delivery of this Agreement and the performance
by Buyer of the Contemplated Transactions hereby, certified by
the Secretary of Buyer.
(iii) The opinion of Silverman, Collura & Chernis, P.C., Buyer's
legal counsel, in substantially the form of Schedule 6.03(b).
(iv) The Real Property Options executed by Buyer in the form
annexed hereto as Schedule 1.01(c) and 1.01(d).
(v) Such other documents necessary or appropriate to consummate
the Contemplated Transactions hereby or by the Other
Agreements.
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ARTICLE VII
WIRE TRANSFER;
RESCISSION;
ESCROW PROVISIONS
7.01 WIRE TRANSFER. On the Settlement Date, the Buyer shall wire transfer
(the "Wire Transfers") federal funds (a) to the Sellers (as provided in
Article 2.03) in an aggregate amount equal to the Base Purchase Price
(less any adjustments made as of that date pursuant to Section 2.02)
plus an amount equal to $2,607 per day per day from and including July
1, 1997 through and including the Settlement Date; and (b) to SCCB in an
amount equal to the Estimated Purchase Price Increase as provided in
Section 5.06, 3(a).
7.02 OPERATIONS IN TRANSITION PERIOD. In the period between the Closing Date
and the Settlement Date, (the "Transition Period") the Board of
Directors of the Company shall consist of Thomas A. Denney and Marlene
C. Denney. In the Transition Period the Companies shall conduct their
affairs in the Ordinary Course of Business as provided in Article 5.01
and salaries paid to Thomas A. and Marlene C. Denney shall not exceed,
in the aggregate, the rate of $12,500 per month.
7.03 RESCISSION. The Buyer's rights and Sellers' obligations under this
Agreement shall cease, this Agreement shall automatically terminate in
the event that the Escrow Agent has not, prior to 5:00 p.m. on September
30, 1997, received each of (i) confirmation of the Wire Transfers; (ii)
either confirmation from Blue Bird of the extension of the Blue Bird
Franchise Agreements through the period ending August 30, 1998 or a
notice from Buyer stating that it has waived such confirmation; and
(iii) confirmation either of (x) satisfaction of all indebtedness of the
Companies for borrowed money and all performance bonds payment for which
is guaranteed by the Sellers; or (y) confirmation that such guarantees
have been terminated.
7.04 ESCROW DOCUMENTS. The Escrow Agent shall hold the documents delivered
to it by Sellers pursuant to Article 6.03(a) ("Sellers' Documents") and
by Buyer, pursuant to Article 6.03(b) ("Buyers' Documents") in escrow
subject to the terms of an escrow agreement ("Escrow Agreement") in the
form annexed hereto as Schedule 7.04. The Sellers' Documents and the
Buyers' Documents are jointly referred to herein as the "Escrow
Documents". The Escrow Agreement shall incorporate by reference the
following terms and conditions;
(a) Upon receipt prior to 5:00 p.m. on September 30, 1997, of (i)
confirmation of the Wire Transfers; (ii) either confirmation from Blue
Bird of the extension of the Blue Bird Franchise Agreements through the
period ending August 30, 1998 or a notice from Buyer stating that it has
waived such confirmation; and (iii) confirmation either of (x)
satisfaction of all indebtedness of the Companies for borrowed money and
all
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performance bonds, payment for which is guaranteed by the Sellers; or
(y) confirmation that such guarantees have been terminated; the Escrow
Agent shall simultaneously:
(i) deliver the Sellers' Documents to Buyer by delivery of same to
Silverman, Collura, Chernis & Balzano at the address provided in
Section 9.05;
(ii) deliver the Buyers' Documents to Sellers' by delivery to same to
Peter Hubbard, Esq. at the address provided in Section 9.05.
(b) In the event the Escrow Agent has not received, by 5:00 p.m.,
September 30, 1997, the confirmations referred to in subparagraph (a) of
this section, the Escrow Agent shall (x) deliver the Sellers' Documents
to Sellers by delivery of the same to Peter L. Hubbard; and (ii) deliver
the Buyer's Documents to Buyer by delivery of the same to Silverman,
Collura, Chernis & Balzano, P.C.
ARTICLE VIII
INDEMNIFICATION
8.01. INDEMNIFICATION BY SELLERS.
(a) Sellers shall indemnify, defend, save and hold Buyer harmless from
and against all demands, claims, expenses (including reasonable
attorneys' fees but excluding indirect, incidental or consequential
damages incurred by Buyer), losses or actions (collectively "Claims")
incurred by Buyer or the Companies in connection with (i) any material
breach of the representations and warranties made by Sellers or the
Companies in this Agreement or any material breach of any of the
covenants or agreements made by Sellers in this Agreement; or (ii) any
Claims referred to in the Schedules incorporated in this agreement, for
which either no insurance coverage is provided, or for which the amount
of Claims shall exceed the limits of applicable insurance coverage.
(b) Unless it shall be finally determined by a court of competent
jurisdiction that either of the Sellers had actual knowledge that a
representation or warranty was false, Sellers obligations under this
Article (i) shall not exceed the amount of the Purchase Price for the
Shares; (ii) shall not apply to Claims which cumulatively aggregate
less than $150,000 in amount (the "Deductible Amount") (provided that
the Deductible Amount shall be increased to $200,000 commencing 24
months following the Closing Date); and (iii) shall expire 48 months
after the Closing Date. The Deductible Amount shall have no application
to Sellers' obligation under Article 5.09.
(c) The indemnification provision of subparagraph (a) of this Article
shall be subject to the following with respect to Claims arising in
connection with the warranties and representations in section 3.23 (the
"Environmental Claims"):
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(i) The indemnification shall not apply to the first $200,000 in
cumulative Environmental Claims and shall be limited to an aggregate
amount of $1,000,000 in excess thereof;
(ii) The Deductible Amount shall have no application to Environmental
Claims.
(iii) Sellers indemnification obligation shall not apply to
Environmental Claims asserted after six years following the Closing
Date.
8.02. INDEMNIFICATION BY BUYER.
(a) Buyer shall indemnify, defend, save and hold Sellers harmless from
and against any and all demands, claims, expenses (including reasonable
attorneys' fees), losses or actions incurred by Sellers in connection
with (i) any material breach of the representations and warranties made
by Buyer in this Agreement or any material breach of any of the
covenants or agreements made by Buyer in this Agreement.
(b) The Buyer shall indemnify Sellers for the amount of any increased
tax, penalty and/or interest (collectively the "Audit Cost") which they
are required to pay a result of any IRS or State audit arising in
connection with the 338(h)(10) election provided for in Section 5.06.2
together with an additional amount which, when added to the Audit Cost,
will make the Sellers whole on the additional income taxes (if any)
payable by Sellers for the amount paid to them under this
indemnification provision.
(c) In the event that the Sellers are not released from any guaranty
they may have given of any indebtedness of either Company, including
specifically guarantees to Chase Manhattan Bank and the Sellers'
obligations under a certain Master Surety Agreement with the United
States Fidelity and Guaranty Company, the Buyer shall indemnify Sellers
for any liability, cost or expense, including reasonable attorneys fees,
which the Sellers may incur as the result of any claims which are made
by reason of any such guarantees.
8.03. NOTICE OF CLAIMS. If Buyer or Sellers (an ''Indemnified Party'')
believes that it has suffered or incurred any damages for which it is
entitled to indemnification under this Article VIII, such Indemnified
Party shall promptly notify the party or parties from whom
indemnification is being claimed (the "Indemnifying Parties")
identifying with particularity the basis of such claim. If any action at
law or suit in equity is instituted by or against a third party with
respect to which any Indemnified Party intends to claim any damages,
such Indemnified Party shall promptly notify the Indemnifying Parties of
such action or suit; failure to make timely notice of such claims shall
not invalidate the Indemnified Party's right to indemnification under
this Article VIII within the applicable time period set forth in this
Article VIII unless such delay has a material adverse effect on the
rights of the Indemnifying Party with respect to such claim.
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8.04. THIRD PARTY CLAIMS. In the event the Indemnifying Party is not in breach
of its obligation to indemnify under this Article VIII, the Indemnifying
Party shall have the right to conduct and control, through counsel of
its choosing, any third party claim, action or suit, and the
Indemnifying Party may compromise or settle the same, subject to the
approval of the Indemnified Party which shall not be unreasonably
withheld. The Indemnified Party shall have the right to participate in
any such action, at its own expense and through counsel of its own
choosing.
8.05. MINIMIZING LOSSES. Each party agrees to use all commercially reasonable
efforts to minimize all damages, losses, deficiencies, costs and
expenses for which it may seek indemnification from the other party
pursuant to this Article VIII, and to minimize the amount of such
indemnification obligation by reasonably pursuing the maximum possible
insurance recovery, or recovery from other available sources with
respect to such damages, losses, deficiencies, costs and expenses.
ARTICLE IX
MISCELLANEOUS
9.01. CONSTRUCTION. As used herein, unless the context otherwise requires: (i)
references to "Article" or "Section" are to an article or section
hereof; (ii) all "Exhibits" and "Schedules" referred to herein are to
Exhibits and Schedules attached hereto and are incorporated herein by
reference and made a part hereof; (iii) "include", "includes" and
"including" are deemed to be followed by "without limitation" whether or
not they are in fact followed by such words or words of like import;
(iv) "knowledge" means actual knowledge; (v) the headings of the various
articles, sections and other subdivisions hereof are for convenience of
reference only and shall not modify, define or limit any of the terms or
provisions hereof.
9.02. COSTS AND EXPENSES. Buyer and Sellers shall each pay its respective
expenses incurred in connection with this Agreement and the Contemplated
Transactions hereby, except as otherwise specifically provided herein.
9.03. GOVERNING LAW. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York, without regard to
conflict of law principles. The Buyer, the Sellers and the Companies
submit to the jurisdiction of the courts of the state of New York
located in New York City, the courts of the United States of America for
the Eastern District of New York, and appellate courts from any thereof,
and agree that such courts are convenient forums.
9.04. FURTHER ASSURANCES. Sellers shall, at any time and from time to time on
and after the Closing Date, upon request by Buyer and without further
consideration, take or cause to be taken such actions and execute,
acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such instruments, documents, transfers, conveyances and
assurances as may be required or desirable for the better conveying,
transferring,
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assigning, delivering, assuring and confirming the Shares to Buyer and
execute any documents required with respect to the sale of the Shares
pursuant to this Agreement.
9.05. NOTICES. All notices and other communications given or made pursuant to
this Agreement shall be in writing and shall be deemed to have been duly
given or made (i) the second business day after the date of mailing, if
delivered by registered or certified mail, postage prepaid, return
receipt requested, (ii) upon delivery, if sent by hand delivery, (iii)
upon delivery, if sent by prepaid overnight carrier, with a record of
receipt, or (iv) the next day after the date of dispatch, if sent by
cable, telegram, overnight carrier, facsimile or telecopy (with a copy
simultaneously sent by registered or certified mail, postage prepaid,
return receipt requested), to the parties at the following addresses (or
at such other addresses as shall be specified by the parties by like
notice):
(i) if to Buyer, to:
Buyer Express Transportation Corp.
7 North Street
Staten Island, New York 10302
Attn: Domenic F. Gatto
Chairman, President and Chief Executive Officer
Telecopy: 718 442-5105
with a required copy to:
Peter Silverman, Esq.
381 Park Avenue South Suite 1601
New York, NY 10016
Telecopy: (212) 779-8858
(ii) if to Thomas A. Denney:
Thomas A. Denney
108 White Heron Circle
Fayetteville, New York 13066
With a copy to:
Peter Hubbard, Esq.
Menter, Rudin & Trevelpiece, P.C.
500 South Salina Street Suite 500
Syracuse, New York 13202
(iii) if to Marlene C. Denney:
Marlene C. Denney
8404 Hobnail Road
Manlius, New York 13104
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With a copy to:
Peter L. Hubbard, Esq.
Menter, Rudin & Trevelpiece, P.C.
500 South Salina Street Suite 500
Syracuse, New York 13202
(iv) if to the Companies:
Thomas A. Denney
Marlene C. Denney (at the addresses provided above)
With a copy to:
Peter L. Hubbard, Esq.
Menter, Rudin & Trevelpiece, P.C.
500 South Salina Street Suite 500
Syracuse, New York 13202
Notices to the Companies shall be addressed to Sellers before Closing and to
Buyer after Closing. Any party hereto may change the address to which notice to
it, or copies thereof, shall be addressed, by giving notice thereof to the other
parties hereto in conformity with the foregoing.
9.06. ASSIGNMENT; GOVERNING LAW. This Agreement and all the rights and powers
granted hereby shall bind and inure to the benefit of the parties hereto
and their respective permitted successors, heirs, personal
representatives and permitted assigns. This Agreement and the rights,
interests and obligations hereunder may not be assigned by any party
hereto without the prior written consent of the other parties hereto.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to its conflict of law
rules.
9.07. AMENDMENT AND WAIVER; CUMULATIVE EFFECT. To be effective, any amendment
or waiver under this Agreement must be in writing and be signed by the
party against whom enforcement of the same is sought. The rights and
remedies of the parties hereto are cumulative and not exclusive of the
rights and remedies that they otherwise might have now or hereafter, at
law, in equity, by statute or otherwise.
9.08. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement and the
schedules and exhibits hereto set forth all of the promises, covenants,
agreements, conditions and undertakings between the parties hereto with
respect to the subject matter hereof, and supersede all prior or
contemporaneous agreements and understandings, negotiations, inducements
or conditions, express or implied, oral or written, including the letter
of intent, as amended. This Agreement is not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
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9.09. SEVERABILITY. If any term or other provision of this Agreement is held
by a court of competent jurisdiction to be invalid, illegal or incapable
of being enforced under any rule of law in any particular respect or
under any particular circumstances, such term or provision shall
nevertheless remain in full force and effect in all other respects and
under all other circumstances, and all other terms, conditions and
provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the Contemplated
Transactions hereby is not affected in any manner materially adverse to
any party. Upon final determination by a court of competent
jurisdiction that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner to the end
that the Contemplated Transactions hereby are fulfilled to the fullest
extent possible.
9.10. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of
which together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and Year first above written.
-------------------------------------
Thomas A. Denney
-------------------------------------
Marlene C. Denney
JERSEY BUS SALES, INC.
By:
-------------------------------------
CENTRAL NEW YORK
COACH SALES AND SERVICE, INC.
By:
-------------------------------------
ATLANTIC EXPRESS
TRANSPORTATION CORP.
By:
-------------------------------------
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STATE OF NEW YORK )
)ss.:
COUNTY OF )
On July ___, 1997, before me personally came Thomas A. Denney, to me
know to be the individual described in and who executed the foregoing
instrument, and acknowledged that he executed the same.
---------------------------------
Notary Public
STATE OF NEW YORK )
)ss.:
COUNTY OF )
On July ___, 1997, before me personally came Marlene C. Denney, to me
know to be the individual described in and who executed the foregoing
instrument, and acknowledged that she executed the same.
---------------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
)ss.:
COUNTY OF )
On July ___, 1997, before me personally came __________________________,
to me known, who being by me duly sworn, did depose and say that deponent
resides at ______________________________________, deponent is the
__________________________ of Central New York Coach Sales & Service, Inc., the
Corporation described in and which executed the foregoing instrument; and
deponent signed deponent's name thereto by order of the board of directors of
such corporation.
----------------------------------
Notary Public
STATE OF NEW YORK )
)ss.:
COUNTY OF )
On July ___, 1997, before me personally came __________________________,
to me known, who being by me duly sworn, did depose and say that deponent
resides at ______________________________________, deponent is the
__________________________ of Jersey Bus Sales, Inc., the Corporation described
in and which executed the foregoing instrument; and deponent signed deponent's
name thereto by order of the board of directors of such corporation.
----------------------------------
Notary Public
STATE OF NEW YORK )
)ss.:
COUNTY OF )
On July ___, 1997, before me personally came __________________________,
to me known, who being by me duly sworn, did depose and say that deponent
resides at ______________________________________, deponent is the
__________________________ of Atlantic Express Transportation Corp., the
Corporation described in and which executed the foregoing instrument; and
deponent signed deponent's name thereto by order of the board of directors of
such corporation.
----------------------------------
Notary Public
