SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of Earliest Event Reported): July 11, 1997
TRANSIT GROUP, INC.
(Exact name of Registrant as specified in its charter)
Florida 33-30123-A 58-2576629
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification No.)
incorporation or
organization)
8923 Western Way
Jacksonville, Florida 32256
(Address of principal executive offices, including zip code)
(904) 363-0089
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 11, 1997, Transit Group Inc. ("Transit Group"),
formerly known as "General Parcel Service, Inc." consummated the
acquisition of Carolina Pacific Distributors, Inc. ("Carolina
Pacific"), a North Carolina corporation and the business and
related assets operated by the owners of Carolina Pacific.
Pursuant to the Stock Purchase Agreement executed at closing
(the "Agreement"), Transit Group purchased all of the
outstanding capital stock of Carolina Pacific and the business
and related assets operated and owned by the shareholders of
Carolina Pacific for a purchase price of approximately $ 11.3
million. The purchase price was paid with the payment of $3.5
million in cash at closing and the issuance of 1,733,000 shares
of common stock of Transit Group to the shareholders of
Carolina Pacific.
Based in Jacksonville, Florida, Transit Group is a Florida
corporation currently in the parcel delivery business.
Carolina Pacific, which has been in business for more than 20
years, is a privately held truckload carrier based in Highpoint,
North Carolina.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
At the present time, it is impractical to provide the required
financial statements for Carolina Pacific relative to the
Carolina Pacific acquisition as required by Article 11 of
Regulation S-X and this Item 7 of Form 8-K. Transit Group will
file such pro forma financial information under cover of a Form
8-K/A as soon as practicable, but not later than September 24,
1997 (60 days after this Report is required to be filed).
(b) Pro Forma Financial Information
At the present time, it is impractical to provide the pro forma
financial information relative to the Carolina Pacific
acquisition as required by Article 11 of Regulation S-X and this
Item 7 of Form 8-K. Transit Group will file such pro forma
financial information under cover of a Form 8-K/A as soon as
practicable, but not later than September 24, 1997 (60 days
after this Report is required to be filed).
(c) Exhibits
2.1 Stock Purchase Agreement dated July 11, 1997, by and among
Transit Group, The Robert E. Mazurek and Joann E. Mazurek
Irrevocable Unitrust, Robert E. Mazurek and Joann E. Mazurek and
The Carolina Pacific Distributors, Inc. Employee Stock Ownership
Plan.
99 Press Release.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
TRANSIT GROUP, INC.
Date: July 23, 1997
/s/ Philip A. Belyew
- --------------------------
Philip A. Belyew
President and Chief Executive Officer
STOCK PURCHASE AGREEMENT
BY
TRANSIT GROUP, INC.
f/k/a GENERAL PARCEL SERVICE, INC.
AND
THE ROBERT E. MAZUREK
AND
JOANN E. MAZUREK IRREVOCABLE UNITRUST
AND
ROBERT E. MAZUREK
AND
JOANN E. MAZUREK, INDIVIDUALLY
AND
THE CAROLINA PACIFIC DISTRIBUTORS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
DATED: July 11, 1997
TABLE OF CONTENTS
1. DEFINITIONS
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
2.2 PURCHASE PRICE
2.3 CLOSING
2.4 CLOSING OBLIGATIONS
3. REPRESENTATIONS AND WARRANTIES OF PRINCIPAL SELLERS
3.1 ORGANIZATION AND GOOD STANDING
3.2 AUTHORITY; NO CONFLICT
3.3 CAPITALIZATION
3.4 FINANCIAL STATEMENTS
3.5 BOOKS AND RECORDS
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
3.7 CONDITION AND SUFFICIENCY OF ASSETS
3.8 ACCOUNTS RECEIVABLE
3.9 NO UNDISCLOSED LIABILITIES
3.10 TAXES
3.11 NO MATERIAL ADVERSE CHANGE.
3.12 EMPLOYEE BENEFITS
3.13 COMPLIANCE
3.14 LITIGATION
3.15 ABSENCE OF CHANGES
3.16 CONTRACTS; NO DEFAULTS
3.17 INSURANCE
3.18 ENVIRONMENTAL MATTERS
3.19 EMPLOYEES; INDEPENDENT CONTRACTORS
3.20 LABOR RELATIONS; COMPLIANCE
3.21 INTELLECTUAL PROPERTY
3.22 RELATIONSHIPS WITH RELATED PERSONS
3.23 BROKERS OR FINDERS
3.24 DISCLOSURE
4. REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 ORGANIZATION AND GOOD STANDING
4.2 AUTHORITY; NO CONFLICT
4.3 INVESTMENT INTENT
4.4 CERTAIN PROCEEDINGS
4.5 BROKERS OR FINDERS
4.6 PUBLIC FILINGS
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION
5.2 OPERATION OF THE BUSINESSES OF THE COMPANY
5.3 NEGATIVE COVENANT
5.4 NOTIFICATION
5.5 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS
5.6 NO NEGOTIATION
5.7 BEST EFFORTS
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
6.1 ACCURACY OF REPRESENTATIONS
6.2 SELLERS' PERFORMANCE
6.3 CONSENTS
6.4 ADDITIONAL DOCUMENTS
6.5 NO PROCEEDINGS
6.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE
PROCEEDS
7. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
7.1 ACCURACY OF REPRESENTATIONS
7.2 BUYER'S PERFORMANCE
7.3 CONSENTS
7.4 ADDITIONAL DOCUMENTS
7.5 NO PROCEEDINGS
8. TERMINATION
8.1 TERMINATION EVENTS
8.2 EFFECT OF TERMINATION
9. INDEMNIFICATION; REMEDIES
9.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY
KNOWLEDGE
9.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY PRINCIPAL
SELLERS
9.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
9.4 TIME LIMITATIONS
9.5 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
9.6 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
10. GENERAL PROVISIONS
10.1 EXPENSES
10.2 PUBLIC ANNOUNCEMENTS
10.3 CONFIDENTIALITY
10.4 NOTICES
10.5 FURTHER ASSURANCES
10.6 WAIVER
10.7 ENTIRE AGREEMENT AND MODIFICATION
10.8 DISCLOSURE LETTER
10.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
10.10 SEVERABILITY
10.11 SECTION HEADINGS, CONSTRUCTION
10.12 TIME OF ESSENCE
10.13 GOVERNING LAW
10.14 COUNTERPARTS
Stock Purchase Agreement
This Stock Purchase Agreement ("Agreement") is made as of July
11, 1997, by Transit Group, Inc., f/k/a General Parcel Service,
Inc., a Florida corporation ("Buyer"), Robert E. Mazurek and
Joann E. Mazurek, individual residents in North Carolina
(together, the "Principal Sellers"), The Robert E. Mazurek and
Joann E. Mazurek Irrevocable Unitrust (the "Trust"), and The
Carolina Pacific Distributors, Inc. Employee Stock Ownership
Plan (the "ESOP" and, collectively with the Trust, "Sellers").
RECITALS
A. Sellers desire to sell, and Buyer desires to purchase, all
of the issued and outstanding shares (the "Shares") of capital
stock of Carolina Pacific Distributors, Inc., a North Carolina
corporation (the "Company"), for the consideration and on the
terms set forth in this Agreement.
B. Sellers are the sole shareholders of the Company. The
Principal Sellers are the grantors and beneficiaries of the
Trust.
AGREEMENT
For and in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 1:
"Agreement" --this Stock Purchase Agreement together with all
Schedules and Exhibits hereto.
"Balance Sheet"--as defined in Section 3.4.
"Buyer"--as defined in the first paragraph of this Agreement.
"Closing"--as defined in Section 2.3.
"Closing Date"--the date and time as of which the Closing
actually takes place.
"Company"--collectively the Company identified in the Recitals
to this Agreement together with each subsidiary of same.
"Contemplated Transactions"--all of the transactions
contemplated by this Agreement, including:
(a) the sale of the Shares by Sellers to Buyer;
(b) the execution, delivery, and performance of the
Noncompetition Agreements and the Escrow Agreement.
(c) the performance by Buyer and Sellers of their respective
covenants and obligations under this Agreement; and
(d) Buyer's acquisition and ownership of the Shares.
"Damages"--as defined in Section 9.2.
"Disclosure Letter"--the disclosure letter delivered by Sellers
to Buyer concurrently with the execution and delivery of this
Agreement.
"Environmental Law"--any law or regulation that requires or
relates to:
(a) advising appropriate authorities, employees, and the
public of 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 have significant impact on the environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the
environment;
(c) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or
other potentially harmful substances;
(d) cleaning up pollutants that have been released, preventing
the threat of release, or paying the costs of such clean up or
prevention; or
(e) 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, and regulations and rules issued pursuant to that
act or any successor law.
"GAAP"--generally accepted United States accounting principles,
applied on a basis consistent with the basis on which the
Balance Sheet and the other financial statements referred to in
Section 3.4 were prepared.
"Hazardous Materials"--any waste or other substance that is
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, including petroleum and all derivatives
thereof or synthetic substitutes therefor and asbestos or
asbestos-containing materials.
"Noncompetition Agreements"--as defined in Section 2.4(a)(iii).
"Occupational Safety and Health Law"--any law or regulation
designed to provide safe and healthful working conditions and to
reduce occupational safety and health hazards, and any program
in which the Company participates, if any, whether governmental
or private (including those promulgated or sponsored by industry
associations and insurance companies), designed to provide safe
and healthful working conditions.
"Securities Act"--the Securities Act of 1933 or any successor
law, and regulations and rules issued pursuant to that act or
any successor law.
"Sellers"--as defined in the first paragraph of this Agreement.
"Shares"--as defined in the Recitals of this Agreement.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES. Subject to the terms and conditions of this
Agreement, at the Closing, Sellers will sell and transfer the
Shares to Buyer, and Buyer will purchase the Shares from Sellers.
2.2 PURCHASE PRICE. The purchase price for the Shares will be
an amount equal to (i) US Three Million Five Hundred Thousand
Dollars (US $3,500,000) in cash, to be paid by wire transfer or
certified check and (ii) the issuance of One Million Seven
Hundred Thirty-Three Thousand Three Hundred Thirty-Three
(1,733,333) shares of common stock of the Buyer (collectively
the "Purchase Price").
2.3 CLOSING. The consummation of the purchase and sale
provided for in this Agreement (the "Closing") will take place
at the offices of Sellers' counsel, Wyatt Early Harris &
Wheeler, L.L.P., located at 1912 Eastchester Drive, Suite 400,
High Point, North Carolina, at 10:00 a.m. (local time) on July
11, 1997, or at such time and place as the parties may agree.
2.4 CLOSING OBLIGATIONS. At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the Shares, duly endorsed for
transfer to Buyer (or accompanied by duly executed stock
powers), with signatures guaranteed by a commercial bank;
(ii) releases and resignations from the officers and
directors of the Company duly executed by such parties;
(iii) noncompetition agreements in the form of Exhibit "A,"
executed by the Principal Sellers (collectively, the
"Noncompetition Agreements"); and
(iv) a certificate executed by the Principal Sellers
certifying to Buyer that each of the Principal Seller's
representations and warranties in this Agreement was accurate in
all respects as of the date of this Agreement and is accurate in
all respects as of the Closing Date as if made on the Closing
Date.
(b) Buyer will deliver to Sellers:
(i) the cash portion of the Purchase Price by wire transfer
or bank cashier's or certified check payable to the order of the
Trust;
(ii) share certificates representing the stock portion of the
Purchase Price in the name of the Sellers in the proportions
shown on Exhibit "B"; and
(iii) a certificate executed by Buyer to the effect that
each of Buyer's representations and warranties in this Agreement
was accurate in all respects as of the date of this Agreement
and is accurate in all respects as of the Closing Date as if
made on the Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF PRINCIPAL SELLERS
The Principal Sellers represent and warrant to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING.
(a) Part 3.1 of the Disclosure Letter contains a statement of
the Company's jurisdiction of incorporation, a list of all other
jurisdictions in which it is authorized to do business, and its
capitalization (including the identity of each stockholder and
the number of shares held by each). The Company is duly
organized, validly existing, and in good standing under the laws
of its jurisdiction of incorporation, with full corporate power
and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under
its contracts. The Company is duly qualified to do business as
a foreign corporation and is in good standing under the laws of
each state or other jurisdiction in which either the ownership
or use of the properties owned or used by it, or the nature of
the activities conducted by it, requires such qualification.
(b) The Principal Sellers have delivered to Buyer copies of
the Articles of Incorporation and Bylaws of the Company, as
currently in effect.
3.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of the Principal Sellers and the Sellers, enforceable
against them in accordance with its terms. Upon the execution
and delivery by the Principal Sellers of the Noncompetition
Agreements, the Noncompetition Agreements will constitute the
legal, valid, and binding obligations of the Principal Sellers,
enforceable against them in accordance with their respective
terms. Sellers and the Principal Sellers have the absolute and
unrestricted right, power, authority, and capacity to execute
and deliver this Agreement and the Noncompetition Agreements (as
to the Principal Sellers) and to perform their obligations under
this Agreement and the Noncompetition Agreements (as to the
Principal Sellers).
(b) Neither the execution and delivery of this Agreement nor
the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without
notice or lapse of time):
(i) contravene, conflict with, or result in a violation of
(A) any provision of the Articles of Incorporation or Bylaws of
the Company; or (B) any resolution adopted by the board of
directors or the stockholders of the Company; or (C) any of the
terms or requirements of any permit, or give any governmental
body the right to revoke, withdraw, suspend, cancel, terminate,
or modify, any permit or authorization that is held by the
Company or that otherwise relates to the business of, or any of
the assets owned or used by, the Company; or (D) any provision
of, or give any person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any contract
to which the Company is bound; or
(ii) result in the imposition or creation of any lien, claim
or encumbrance upon or with respect to any of the assets owned
or used by the Company.
(c) Except as set forth in Part 3.2 of the Disclosure Letter,
neither Sellers, the Principal Sellers nor the Company is or
will be required to give any notice to or obtain any consent
from any person in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the
Contemplated Transactions.
3.3 CAPITALIZATION. The authorized equity securities of the
Company consist of 10,000,000 shares of common stock, par value
$.01 per share, of which 848,500 shares are issued and
outstanding and constitute the Shares. Sellers are and will be
on the Closing Date the record and beneficial owners and holders
of the Shares, free and clear of all liens, claims or
encumbrances. The shares are owned of record as shown on
Exhibit "B." With the exception of the Shares (which are owned
by Sellers), there are no other outstanding equity securities or
other securities of the Company. No legend or other reference
to any purported encumbrance appears upon any certificate
representing equity securities of the Company. All of the
outstanding equity securities of the Company have been duly
authorized and validly issued and are fully paid and
nonassessable. There are no contracts relating to the issuance,
sale, or transfer of any equity securities or other securities
of the Company. None of the outstanding equity securities or
other securities of the Company was issued in violation of the
Securities Act or any other law or regulation. The Company does
not own, nor does it have any contract to acquire, any equity
securities or other securities of any person (other than the
Company) or any direct or indirect equity or ownership interest
in any other business.
3.4 FINANCIAL STATEMENTS. The Principal Sellers have
delivered to Buyer: (a) unaudited balance sheets of the Company
as at September 30 in each of the years 1991 through 1996, and
the related unaudited statements of income, changes in
stockholders' equity, and cash flow for each of the fiscal years
then ended, and (b) a balance sheet of the Company as at May 31,
1997 (the "Balance Sheet"). Such financial statements and the
notes thereto fairly present the financial condition and the
results of operations, changes in stockholders' equity, and cash
flow of the Company as at the respective dates of and for the
periods referred to in such financial statements, in accordance
with accounting principles consistently applied throughout the
periods involved.
3.5 BOOKS AND RECORDS. The books of account, minute books,
stock record books, and other records of the Company, all of
which have been made available to Buyer, are complete and
correct and have been maintained in accordance with applicable
law. The minute books of the Company contain accurate and
complete records of all corporate actions taken by the
stockholders, the Boards of Directors, and committees of the
Boards of Directors of the Company.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES. Part 3.6 of the
Disclosure Letter contains a complete and accurate list of all
real property and material items of personal property owned by
the Company. The Company owns good and marketable title to the
properties and assets located in the facilities owned or
operated by the Company or reflected as owned in the books and
records of the Company, including all of the properties and
assets reflected in the Balance Sheet, and all of the properties
and assets purchased or otherwise acquired by the Company since
the date of the Balance Sheet. Except as set forth in Part 3.6
of the Disclosure Letter, all material properties and assets
reflected in the Balance Sheet are free and clear of all liens,
claims or encumbrances and are not, in the case of real
property, subject to any use restrictions, exceptions,
variances, reservations, or limitations of any nature except,
with respect to all such properties and assets, (a) mortgages or
security interests shown on the Balance Sheet as securing
specified liabilities or obligations, with respect to which no
default (or event that, with notice or lapse of time or both,
would constitute a default) exists, and (b) zoning laws and
other land use restrictions that do not materially impair the
present or anticipated use of the property subject thereto.
3.7 CONDITION AND SUFFICIENCY OF ASSETS. The buildings,
plants, structures, and equipment owned or leased by the Company
are structurally sound, are in good operating condition and
repair, and are adequate for the uses to which they are being
put, and none of such buildings, plants, structures, or
equipment is in need of material maintenance or repairs except
for ordinary, routine maintenance and repairs that are not
material in nature or cost. The building, plants, structures,
and equipment owned or leased by the Company are sufficient for
the continued conduct of the Company's businesses after the
Closing in substantially the same manner as conducted prior to
the Closing.
3.8 ACCOUNTS RECEIVABLE. All accounts receivable of the
Company as of the Closing Date represent or will represent valid
obligations arising from sales actually made or services
actually performed in the ordinary course of business. Unless
paid prior to the Closing Date, the accounts receivable are or
will be current as of the Closing Date. Except as disclosed in
Part 3.14 of the Disclosure Letter, there is no pending contest,
claim, or right of set-off relating to the amount or validity of
such accounts receivable, and the Company has not taken any
action or allowed any omission which would entitle any account
debtor of the Company to validly contest, claim or set-off any
amount of such account receivable.
3.9 NO UNDISCLOSED LIABILITIES. The Company has no
liabilities or obligations of any nature (whether known and
whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the
Balance Sheet and current liabilities incurred in the ordinary
course of business since the dates thereof.
3.10 TAXES.
(a) The Company has filed or caused to be filed on a timely
basis all tax returns that are or were required to be filed by
or with respect to it. The Company has paid, or made provision
for the payment of, all taxes that have or may have become due
for all periods prior to Closing.
(b) No United States, federal or state income tax returns of
the Company have been audited by the IRS or relevant state tax
authorities. Neither Sellers nor the Company has given or been
requested to give waivers or extensions (or is or would be
subject to a waiver or extension given by any other person) of
any statute of limitations relating to the payment of taxes of
the Company.
(c) The charges, accruals, and reserves with respect to taxes
on the books of the Company are adequate and are at least equal
to the Company's liability for taxes. There exists no proposed
tax assessment against the Company except as disclosed in the
Balance Sheet. All taxes that the Company is or was required to
withhold or collect have been duly withheld or collected and, to
the extent required, have been paid to the proper governmental
body or other person.
(d) All tax returns filed by the Company are true, correct,
and complete. The Company is not, and within the five-year
period preceding the Closing Date has not been, an "S"
corporation.
3.11 NO MATERIAL ADVERSE CHANGE. Since the date of the
Balance Sheet, there has not been any material adverse change in
the business, operations, properties, prospects, assets, or
condition of the Company, and no event has occurred or
circumstance exists that may result in such a material adverse
change.
3.12 EMPLOYEE BENEFITS. Part 3.12 of the Company's Disclosure
Letter contains a list of all pension, retirement, disability,
medical, dental or other health plans, life insurance or other
death benefit plans, profit sharing, deferred compensation
agreements, stock, option, bonus or other incentive plans,
vacation, sick, holiday or other paid leave plans, severance
plans or other similar employee benefit plans maintained by the
Company (the "Plans"), including, without limitation, all
"employee benefit plans" as defined in Section 3(3) of ERISA.
All contributions due from the Company with respect to any of
the Plans have been made or accrued on the Company's financial
statements, and no further contributions will be due or will
have accrued thereunder as of the Closing. Each of the Plans,
and its operation and administration, is, in all material
respects, in compliance with all applicable, federal, state,
local and other governmental laws and ordinances, orders, rules
and regulations, including the requirements of ERISA and the
Internal Revenue Code. All such Plans that are "employee
pension benefit plans" (as defined in Section 3(2) of ERISA)
which are intended to qualify under I.R.C. Section 401(a)(8)
have received favorable determination letters that such plans
satisfy all qualification requirements. In addition, the
Company has not been a participant in any "prohibited
transaction," within the meaning of Section 406 of ERISA, with
respect to any employee pension benefit plan (as defined in
Section 3(2) of ERISA) which the Company sponsors as employer or
in which the Company participates as an employer, which was not
otherwise exempt pursuant to Section 408 of ERISA (including any
individual exemption granted under Section 408(a) of ERISA), or
which could result in an excise tax.
3.13 COMPLIANCE.
(a) The Company is and at all times has conducted its business
and the ownership and use of its assets in full compliance in
all material respects with all applicable laws.
(b) Part 3.13 of the Disclosure Letter contains a complete and
accurate list of each permit or governmental consent or
authorization that is held by the Company or that otherwise
relates to the business of, or to any of the assets owned or
used by, the Company. Each such permit or governmental consent
or authorization is valid and in full force and effect and
constitutes all of the governmental authorizations necessary to
permit the Company to lawfully conduct and operate its business
in the manner currently conducted.
3.14 LITIGATION.
(a) Except as set forth in Part 3.14 of the Disclosure Letter,
there is no pending or to the knowledge of the Principal
Sellers, threatened 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 (i) that has been commenced by
or against the Company or that otherwise relates to or may
affect the business of, or any of the assets owned or used by,
the Company; or (ii) that challenges, or that may have the
effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions.
(b) There is no order or court decision to which the Company,
the Sellers, the Principal Sellers, any director or officer of
the Company, or any of the assets owned or used by the Company,
is subject.
3.15 ABSENCE OF CHANGES. Except as set forth in Part 3.15 of
the Disclosure Letter, since the date of the Balance Sheet, the
Company has conducted its business only in the ordinary course
and there has not been any:
(a) change in the Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of
capital stock of the Company; issuance of any security
convertible into such capital stock; grant of any purchase,
redemption or stock retirement rights, or any acquisition by the
Company of any shares of its capital stock; or declaration or
payment of any dividend or other distribution or payment in
respect of shares of capital stock;
(b) amendment to the Articles of Incorporation or Bylaws of
the Company;
(c) payment or increase by the Company of any bonuses,
salaries, or other compensation to any stockholder, director,
officer, or employee (except normal raises in the ordinary
course of business consistent with past practices), or entry
into any employment, severance, or similar contract with any
director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation,
savings, insurance, pension, retirement, or other employee
benefit plan for or with any employees of the Company;
(e) damage to or destruction or loss of any material asset or
property of the Company, whether or not covered by insurance;
(f) entry into, termination of, or receipt of notice of
termination of any material contract or any contract or
transaction involving a total remaining commitment by or to the
Company of $50,000 or more;
(g) sale, lease, or other disposition of any material asset or
property of the Company or mortgage, pledge, or imposition of
any lien or other encumbrance on any material asset or property
of the Company;
(h) material change in the accounting methods used by the
Company; or
(i) agreement, whether oral or written, by the Company to do
any of the foregoing.
3.16 CONTRACTS; NO DEFAULTS.
(a) Part 3.16 of the Disclosure Letter contains a complete and
accurate list, and the Principals Sellers have delivered to
Buyer true and complete copies, of:
(i) each contract that involves performance of services or
delivery of goods or materials by or to the Company of an amount
or value in excess of $50,000;
(ii) each lease, license, installment and conditional sale
agreement, and other contract affecting the ownership of,
leasing of, title to, use of, or any leasehold or other interest
in, any real or personal property;
(iii) each collective bargaining agreement and other contract
to or with any labor union or other employee representative or a
group of employees;
(iv) each joint venture, partnership, and other contract
involving a sharing of profits, losses, costs, or liabilities by
the Company with any other person;
(v) each contract containing covenants that in any way
purport to restrict the business activity of the Company;
(vi) each power of attorney that is currently effective and
outstanding; and
(vii) each written warranty, guaranty, and or other similar
undertaking by the Company.
(b) Each contract identified or required to be identified in
Part 3.16 of the Disclosure Letter is in full force and effect
and is valid and enforceable in accordance with its terms. The
Company is, and at all times has been, in full compliance in all
material respects with all applicable terms and requirements of
each contract. Each third party to any contract with the
Company is, and at all times has been, in full compliance in all
material respects with all applicable terms and requirements of
such contract. The Company has not given nor received notice
from any other person regarding any actual, alleged, possible,
or potential violation or breach of, or default under, any
contract, and no default or event of default has occurred
thereunder.
3.17 INSURANCE.
(a) The Principal Sellers have delivered to Buyer true and
complete copies of all insurance policies to which the Company
is a party or under which the Company is or has been covered at
any time within the five (5) years preceding the date of this
Agreement, and true and complete copies of all pending
applications for policies of insurance.
(b) All policies to which the Company is a party or that
provide coverage to either the Principal Sellers, the Company,
or any director or officer of the Company (i) are valid,
outstanding, and enforceable; (ii) in the judgment of the
Principal Sellers, are issued by an insurer that is financially
sound and reputable; (iii) provide adequate insurance coverage
for the assets and the operations of the Company for all risks
normally insured against in the Company's industry; (iv) will
not terminate by virtue of the consummation of the Contemplated
Transactions; and (v) except for the Company's workers'
compensation insurance policy, do not provide for any
retrospective premium adjustment or other experienced-based
liability on the part of the Company.
(c) Neither the Principal Sellers nor the Company has received
(i) any refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (ii) any notice of
cancellation or any other indication that any insurance policy
is no longer in full force or effect or will not be renewed or
that the issuer of any policy is not willing or able to perform
its obligations thereunder.
(d) The Company has paid all premiums due, and have otherwise
performed all of its obligations, under each policy to which the
Company is a party or that provides coverage to the Company.
The Company has given notice to the insurer of all claims that
may be insured thereby.
3.18 ENVIRONMENTAL MATTERS.
(a) The Company is, and at all times has been, in full
compliance in all material respects with, and has not been and
is not in violation of or liable under, any Environmental Law.
The Principal Sellers have no basis to expect, nor has either
Principal Seller or the Company received, any actual or
threatened order, notice, or other communication from (i) any
governmental body or private citizen, or (ii) the current or
prior owner or operator of any facilities owned or leased by the
Company, of any actual or potential violation or failure to
comply with any Environmental Law.
(b) Except as set forth on Part 3.18 of the Disclosure letter,
there are no Hazardous Materials at the facilities owned or
leased by the Company or, to the knowledge of the Principal
Sellers, at any adjoining property, including any Hazardous
Materials contained in barrels, above or underground storage
tanks, landfills, land deposits, dumps or equipment, or
incorporated into any structure therein or thereon. All
Hazardous Materials present on the Company's property have been
used, stored and handled in material compliance with all
applicable Environmental Laws.
(c) The Principal Sellers have delivered to Buyer true and
complete copies and results of any reports, studies, analyses,
tests, or monitoring possessed or initiated by Sellers or the
Company pertaining to Hazardous Materials in, on, or under the
facilities owned or leased by the Company.
3.19 EMPLOYEES; INDEPENDENT CONTRACTORS.
(a) Part 3.19 of the Disclosure Letter contains a complete and
accurate list of (i) each employee or director of the Company,
including each employee on leave of absence or layoff status,
his or her job title, and current compensation; and (ii) each
independent contractor (other than attorneys, accountants and
other professionals) of the Company, the type of services he or
she provides to the Company and their current compensation.
(b) To the best knowledge of the Principal Sellers, no employee
of the Company is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality,
noncompetition, or proprietary rights agreement, between such
employee and any other person ("Proprietary Rights Agreement")
that in any way adversely affects or will affect (i) the
performance of his duties to the Company, or (ii) the ability of
the Company to conduct its business.
(c) All persons rendering services to the Company have been
properly characterized and treated as either employees or
owner-operators, and the Company has not received notice of, nor
do the Principal Sellers have any reason to believe that, such
treatment will be challenged by the IRS or otherwise.
3.20 LABOR RELATIONS; COMPLIANCE.
(a) The Company has not been nor is it now a party to any
collective bargaining or other labor contract. There is not
presently pending or existing, and there is not threatened, (a)
any strike, slowdown, picketing, work stoppage, or employee
grievance process, (b) any proceeding against or affecting the
Company relating to the alleged violation of any applicable law
pertaining to labor relations or employment matters, including
any charge or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable governmental body, organizational
activity, or other labor or employment dispute against or
affecting the Company, or (c) any application for certification
of a collective bargaining agent. There is no lockout of any
employees by the Company, and no such action is contemplated by
the Company. The Company has complied in all material respects
with all legal requirements relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining, the payment of social
security and similar taxes, occupational safety and health, and
plant closing. Any noncompliance by the Company will not result
in a material adverse effect on the Company.
(b) The Company is, and at all times has been, in full
compliance in all material respects with, and has not been and
is not in violation of or liable under, any Occupational Safety
and Health Law. The Principal Sellers have no basis to expect,
nor has either Principal Seller or the Company received, any
actual or threatened order, notice, or other communication from
any person of any actual or potential violation or failure to
comply with any Occupational Safety and Health Law.
3.21 INTELLECTUAL PROPERTY.
(a) Intellectual Property Assets--The term "Intellectual
Property Assets" includes:
(i) the Company name, all fictional business names, trade
names, registered and unregistered trademarks, service marks,
and applications (collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights in both published works and unpublished
works (collectively, "Copyrights"); and
(iv) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively,
"Trade Secrets"), owned, used, or licensed by the Company.
(b) The Intellectual Property Assets are listed on Part 3.21
of the Disclosure Letter. Except for licensed computer
software, the Company owns all right, title, and interest in
and to each of the Intellectual Property Assets, free and clear
of all liens, security interests, charges, encumbrances,
equities, and other adverse claims, and has the right to use
without payment to a third party all of the Intellectual
Property Assets.
3.22 RELATIONSHIPS WITH RELATED PERSONS. Except as disclosed
on Part 3.22 of the Disclosure Letter, (a) no Seller or
Principal Seller or any related person or affiliate of the
Principal Sellers or of the Company has, or has had, any
interest in any property used in the Company's business; and
(b) no Seller, Principal Seller or any related person or
affiliate of Sellers, the Principal Sellers or of the Company
is, or has owned, directly or indirectly, an equity interest or
any other financial or profit interest in, an entity that has
(i) had business dealings or a material financial interest in
any transaction with the Company, or (ii) engaged in competition
with the Company with respect to any line of the products or
services of the Company; and (c) no Seller, Principal Seller or
any related person or affiliate of Sellers or Principal Sellers
or of the Company is a party to any contract with the Company.
3.23 BROKERS OR FINDERS. Except as disclosed on Part 3.23 of
the Disclosure Letter, neither the Company, Sellers, Principal
Sellers or their respective agents have incurred any obligation
or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in
connection with this Agreement. Any brokers' or finders' fees
listed in Part 3.23 shall be paid for by the Sellers.
3.24 DISCLOSURE. No representation or warranty of the
Principal Sellers in this Agreement and no statement in the
Disclosure Letter omits to state a material fact necessary to
make the statements herein or therein, in light of the
circumstances in which they were made, not misleading. There is
no fact known to the Principal Sellers that has specific
application to either Principal Seller or the Company (other
than general economic or industry conditions) and that
materially adversely affects or, as far as either Principal
Seller can reasonably foresee, materially threatens, the assets,
business, prospects, financial condition, or results of
operations of the Company that has not been set forth in this
Agreement or the Disclosure Letter.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation
duly organized, validly existing, and in good standing under the
laws of the State of Florida.
4.2 AUTHORITY; NO CONFLICT.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance
with its terms. Buyer has the absolute and unrestricted right,
power, and authority to execute and deliver this Agreement and
to perform its obligations hereunder.
(b) Neither the execution and delivery of this Agreement by
Buyer nor the consummation or performance of any of the
Contemplated Transactions by Buyer will give any person the
right to prevent, delay, or otherwise interfere with any of the
Contemplated Transactions pursuant to:
(i) any provision of Buyer's Articles of Incorporation or
Bylaws;
(ii) any resolution adopted by the board of directors or the
stockholders of Buyer;
(iii) any legal requirement or order to which Buyer may be
subject; or
(iv) any contract to which Buyer is a party or by which Buyer
may be bound.
(c) Buyer is not and will not be required to obtain any consent
from any person in connection with the execution and delivery of
this Agreement or the consummation or performance of any of the
Contemplated Transactions.
4.3 INVESTMENT INTENT. Buyer is acquiring the Shares for its
own account and not with a view to their distribution within the
meaning of Section 2(11) of the Securities Act.
4.4 CERTAIN PROCEEDINGS. There is no pending proceeding that
has been commenced against Buyer and that challenges, or may
have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions.
4.5 BROKERS OR FINDERS. Except as set forth in Schedule 4.5,
Buyer and its officers and agents have incurred no obligation or
liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other similar payment in
connection with this Agreement. Any brokers' or finders' fees
listed in Schedule 4.5 shall be paid for by the Buyer.
4.6 PUBLIC FILINGS. The Buyer's most recently filed Form 10-Q
and Form 10-K (as such Form 10-K has been updated and modified
by any subsequent SEC filings with the Securities and Exchange
Commission) are accurate and complete and no material changes
have occurred since the date thereof except as disclosed in a
separate Disclosure Letter provided by Buyer to Principal
Sellers prior to Closing.
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION. Between the date of this
Agreement and the Closing Date, the Principal Sellers will, and
will cause the Company and its representatives to, (a) afford
Buyer and its representatives and prospective lenders and their
representatives (collectively, "Buyer's Advisors"), at Buyer's
expense, full and free access to the Company's personnel,
properties, contracts, books and records, and other documents
and data, (b) furnish Buyer and Buyer's Advisors, at Buyer's
expense, with copies of all such contracts, books and records,
and other existing documents and data as Buyer may reasonably
request, and (c) furnish Buyer and Buyer's Advisors with such
additional financial, operating, and other data and information
as Buyer may reasonably request.
5.2 OPERATION OF THE BUSINESSES OF THE COMPANY. Between the
date of this Agreement and the Closing Date, the Principal
Sellers will, and will cause the Company to: (a) conduct its
business only in the ordinary course; and (b) use its best
efforts to preserve intact the current business organization of
the Company, keep available the services of its current
officers, employees, and agents, and maintain the relations and
good will with its suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with
the Company.
5.3 NEGATIVE COVENANT. Except as otherwise expressly permitted
by this Agreement, between the date of this Agreement and the
Closing Date, the Principal Sellers will not, and will cause the
Company not to, without the prior consent of Buyer, take any
affirmative action, or fail to take any reasonable action within
their or its control, as a result of which any of the changes or
events listed in Section 3.15 is likely to occur.
5.4 NOTIFICATION. Between the date of this Agreement and the
Closing Date, each Principal Seller will promptly notify Buyer
in writing if such Principal Seller or the Company becomes aware
of any fact or condition that causes or constitutes a breach of
any of the Principal Sellers' representations and warranties as
of the date of this Agreement, or that would cause or constitute
a breach of any such representation or warranty had such
representation or warranty been made as of the time of
occurrence or discovery of such fact or condition.
5.5 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. Except as
expressly provided in this Agreement, the Principal Sellers will
cause all indebtedness owed to the Company by any Seller or any
related person of any Seller to be paid in full prior to Closing.
5.6 NO NEGOTIATION. Until such time, if any, as this Agreement
is terminated pursuant to Section 8, the Principal Sellers will
not, and will cause the Company and each of its representatives
not to, directly or indirectly solicit, initiate, or encourage
any inquiries or proposals from, discuss or negotiate with,
provide any non-public information to, or consider the merits of
any unsolicited inquiries or proposals from, any person (other
than Buyer) relating to any transaction involving the sale of
the business or assets of the Company, or any of the capital
stock of the Company, or any merger, consolidation, business
combination, or similar transaction involving the Company.
5.7 BEST EFFORTS. Between the date of this Agreement and the
Closing Date, the Principal Sellers will use their best efforts
to cause the conditions in Section 6 to be satisfied.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other
actions required to be taken by Buyer at the Closing is subject
to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Buyer, in
whole or in part):
6.1 ACCURACY OF REPRESENTATIONS. All of the Principal Sellers'
representations and warranties in this Agreement must have been
accurate in all respects as of the date of this Agreement, and
must be accurate in all respects as of the Closing Date as if
made on the Closing Date, without giving effect to any
supplement to the Disclosure Letter, unless the same is waived
by the Buyer, and which shall be deemed waived to the extent
Buyer accepts the same and closes the transactions evidenced
hereby.
6.2 SELLERS' PERFORMANCE. All of the covenants and obligations
that Sellers and Principal Sellers are required to perform or to
comply with pursuant to this Agreement at or prior to the
Closing must have been duly performed and complied with in all
respects.
6.3 CONSENTS. Each of the consents identified in Part 3.2 of
the Disclosure Letter must have been obtained and must be in
full force and effect.
6.4 ADDITIONAL DOCUMENTS. Each of the following documents must
have been delivered to Buyer:
(a) an opinion of counsel to the Company, the Principal
Sellers and the Sellers, dated the Closing Date, in form
reasonably acceptable to Buyer; and
(b) such other documents as Buyer may reasonably request for
the purpose of (i) enabling its counsel to provide the opinion
referred to in Section 7.4(a); (ii) evidencing the accuracy of
any of the Principal Sellers' representations and warranties;
(iii) evidencing the performance by any Seller of, or the
compliance by any Seller with, any covenant or obligation
required to be performed or complied with by such Seller; (iv)
evidencing the satisfaction of any condition referred to in this
Section 6; or (v) otherwise facilitating the consummation or
performance of any of the Contemplated Transactions.
6.5 NO PROCEEDINGS. Since the date of this Agreement, there
must not have been commenced or threatened against Buyer,
Principal Sellers, Sellers or the Company, or against any person
affiliated with Buyer or the Principal Sellers or the Company,
any proceeding (a) involving any challenge to, or seeking
damages or other relief in connection with, any of the
Contemplated Transactions, or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with any of the Contemplated Transactions.
6.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. There
must not have been made or threatened by any person (other than
the Sellers) any claim asserting that such person (a) is the
holder or the beneficial owner of, or has the right to acquire
or to obtain beneficial ownership of, any stock of, or any other
voting, equity, or ownership interest in, the Company, or (b) is
entitled to all or any portion of the Purchase Price payable for
the Shares.
7. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other
actions required to be taken by Sellers at the Closing is
subject to the satisfaction, at or prior to the Closing, of each
of the following conditions (any of which may be waived by
Sellers, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. All of Buyer's
representations and warranties in this Agreement must have been
accurate in all respects as of the date of this Agreement and
must be accurate in all respects as of the Closing Date as if
made on the Closing Date, unless the same is waived by the
Sellers, and which shall be deemed waived to the extent Seller
accepts the same and closes the transactions contemplated hereby.
7.2 BUYER'S PERFORMANCE. All of the covenants and obligations
that Buyer is required to perform or to comply with pursuant to
this Agreement at or prior to the Closing must have been
performed and complied with in all respects.
7.3 CONSENTS. Each of the consents identified in Part 3.2 of
the Disclosure Letter must have been obtained and must be in
full force and effect.
7.4 ADDITIONAL DOCUMENTS. Buyer must have caused the following
documents to be delivered to Sellers:
(a) an opinion of Womble Carlyle Sandridge & Rice, PLLC, dated
the Closing Date, in form reasonably acceptable to Seller; and
(b) such other documents as Sellers may reasonably request for
the purpose of (i) enabling their counsel to provide the opinion
referred to in Section 6.4(a); (ii) evidencing the accuracy of
any representation or warranty of Buyer; (iii) evidencing the
performance by Buyer of, or the compliance by Buyer with, any
covenant or obligation required to be performed or complied with
by Buyer; (iv) evidencing the satisfaction of any condition
referred to in this Section 7; or (v) otherwise facilitating the
consummation of any of the Contemplated Transactions.
7.5 NO PROCEEDINGS. Since the date of this Agreement, there
must not have been commenced or threatened against Buyer, the
Principal Sellers or Sellers or the Company, or against any
person affiliated with Buyer or the Principal Sellers or the
Company, any proceeding (a) involving any challenge to, or
seeking damages or other relief in connection with, any of the
Contemplated Transactions, or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with any of the Contemplated Transactions.
8. TERMINATION
8.1 TERMINATION EVENTS. This Agreement may, by notice given
prior to or at the Closing, be terminated:
(a) by either Buyer or the Principal Sellers if a material
breach of any provision of this Agreement has been committed by
the other party and such breach has not been waived;
(b) (i) by Buyer if any of the conditions in Section 6 has not
been satisfied as of the Closing Date or if satisfaction of such
a condition is or becomes impossible (other than through the
failure of Buyer to comply with its obligations under this
Agreement) and Buyer has not waived such condition on or before
the Closing Date; or (ii) by the Principal Sellers, if any of
the conditions in Section 7 has not been satisfied of the
Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Sellers to
comply with their obligations under this Agreement) and Sellers
have not waived such condition on or before the Closing Date;
(c) by mutual consent of Buyer and the Principal Sellers; or
(d) by either Buyer or the Principal Sellers if the Closing
has not occurred (other than through the failure of any party
seeking to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before August 31, 1997,
or such later date as the parties may agree upon.
8.2 EFFECT OF TERMINATION. Each party's right of termination
under Section 8.1 is in addition to any other rights it may have
under this Agreement or otherwise. If this Agreement is
terminated pursuant to Section 8.1, all further obligations of
the parties under this Agreement will terminate, except that the
obligations in Sections 10.1 and 10.3 will survive.
9. INDEMNIFICATION; REMEDIES
9.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY
KNOWLEDGE. All representations, warranties, covenants, and
obligations in this Agreement, the Disclosure Letter, the
supplements to the Disclosure Letter, the certificate delivered
pursuant to Section 2.4(a)(vi), 2.4(b)(iii) and any other
certificate or document delivered pursuant to this Agreement
will survive the Closing for such time as is set forth in
Section 9.4. The right to indemnification, payment of Damages
(as defined below) or other remedy based on such
representations, warranties, covenants, and obligations will not
be affected by any investigation conducted, whether before or
after the execution and delivery of this Agreement or the
Closing Date, with respect to the accuracy or inaccuracy of or
compliance with, any such representation, warranty, covenant, or
obligation.
9.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY PRINCIPAL
SELLERS. The Principal Sellers and the Trust, jointly and
severally, will indemnify and hold harmless Buyer, the Company,
and their respective representatives, stockholders, controlling
persons, and affiliates (collectively, the "Indemnified
Persons") for, and will pay to the Indemnified Persons the
amount of, any loss, liability, claim, damage, expense
(including costs of investigation and defense and reasonable
attorneys' fees based on actual time expended and normal hourly
rates) or diminution of value (in each event to the extent
ascertainable), whether or not involving a third-party claim
(collectively, "Damages"), arising, directly or indirectly, from
or in connection with:
(a) any breach of any representation or warranty made by
Sellers or the Principal Sellers in this Agreement, the
Disclosure Letter, the supplements to the Disclosure Letter, or
any other certificate or document delivered by Sellers or the
Principal Sellers pursuant to this Agreement;
(b) any breach by Sellers or the Principal Sellers of any
covenant or obligation in this Agreement;
(c) any product shipped or manufactured by, or any services
provided by, the Company prior to the Closing Date;
(d) any claim by any person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by any such person with
either the Principal Sellers or the Company (or any person
acting on their behalf) in connection with any of the
Contemplated Transactions;
(e) the allocation of the Purchase Price consideration as set
forth in Section 2.4(b); and
(f) any taxes (including interest or penalties relating
thereto) due or claimed to be owed by the Company with respect
to any period prior to Closing, but excluding with respect to
any tax return due prior to Closing, any state or federal income
taxes for fiscal year 1997.
The remedies provided in this Section 9.2 will not be exclusive
of or limit any other remedies that may be available to Buyer or
the other Indemnified persons.
Neither the Principal Sellers nor the Sellers shall have any
post-closing liability to Buyer or its successors and assigns
with respect to the operation of the business by Buyer or the
use by Buyer or condition of the assets of the Company occurring
after Closing.
9.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER. Buyer
will indemnify and hold harmless Sellers, and will pay to
Sellers the amount of any Damages arising, directly or
indirectly, from or in connection with (a) any breach of any
representation or warranty made by Buyer in this Agreement or in
any certificate delivered by Buyer pursuant to this Agreement,
(b) any breach by Buyer of any covenant or obligation of Buyer
in this Agreement, (c) any product shipped or manufactured by or
any services provided by the Company after the Closing Date, or
(d) any claim by any person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
understanding alleged to have been made by such person with
Buyer (or any person acting on its behalf) in connection with
any of the Contemplated Transactions.
9.4 TIME LIMITATIONS. If the Closing occurs, the Principal
Sellers will have no liability (for indemnification or
otherwise) with respect to any representation or warranty other
than those in Sections 3.3, 3.10, 3.12 and 3.18, unless on or
before the third (3rd) anniversary of the Closing Date Buyer
notifies the Principal Sellers of a claim specifying the factual
basis of that claim in reasonable detail to the extent then
known by Buyer. A claim with respect to Section 3.3 may be made
at any time, and a claim with respect to Sections 3.10, 3.12 or
3.18, or a claim for indemnification or reimbursement based upon
the Sellers' or Principal Sellers' failure to perform any
covenant herein, may be made at any time during the applicable
statute of limitations. If the Closing occurs, Buyer will have
no liability (for indemnification or otherwise) with respect to
any representation or warranty, unless on or before the third
(3rd) anniversary of the Closing Date Sellers notify Buyer of a
claim specifying the factual basis of that claim in reasonable
detail to the extent then known by Sellers.
9.5 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person of notice
of the commencement of any proceeding against it, such
Indemnified Person will, if a claim is to be made against an
indemnifying party under such Section, give notice to the
indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the
indemnifying party of any liability that it may have to any
Indemnified Person, except to the extent that the indemnifying
party demonstrates that the defense of such action is prejudiced
by the Indemnified Person's failure to give such notice.
(b) If any proceeding referred to in Section 9.5(a) is brought
against an Indemnified Person and it gives notice to the
indemnifying party of the commencement of such proceeding, the
indemnifying party will, unless the claim involves taxes, be
entitled to participate in such proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a
party to such proceeding and the Indemnified Person determines
in good faith that joint representation would be inappropriate,
or (ii) the indemnifying party fails to provide reasonable
assurance to the Indemnified Person of its financial capacity to
defend such proceeding and provide indemnification with respect
to such proceeding), to assume the defense of such proceeding
with counsel satisfactory to the Indemnified Person and, after
notice from the indemnifying party to the Indemnified Person of
its election to assume the defense of such proceeding, the
indemnifying party will not, as long as it diligently conducts
such defense, be liable to the Indemnified Person under this
Section 9 for any fees of other counsel or any other expenses
with respect to the defense of such proceeding, in each case
subsequently incurred by the Indemnified Person in connection
with the defense of such proceeding, other than reasonable costs
of investigation. If the indemnifying party assumes the defense
of a proceeding, (i) it will be conclusively established for
purposes of this Agreement that the claims made in that
proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims
may be effected by the indemnifying party without the
Indemnified Person's consent unless (A) there is no finding or
admission of any violation of applicable laws or any violation
of the rights of any person and no effect on any other claims
that may be made against the Indemnified Person, and (B) the
sole relief provided is monetary damages that are paid in full
by the indemnifying party; and (iii) the Indemnified Person will
have no liability with respect to any compromise or settlement
of such claims effected without its consent. If notice is given
to an indemnifying party of the commencement of any proceeding
and the indemnifying party does not, within thirty (30) days
after such notice is given, give notice to the Indemnified
Person of its election to assume the defense of such proceeding,
the indemnifying party will be bound by any determination made
in such proceeding or any compromise or settlement effected by
the Indemnified Person; provided that, during such thirty (30)
day period, the indemnifying party will file any answer due and
otherwise take any action required to prevent a default or
preserve a claim or defense in such matter prior to the
expiration of such thirty (30) day period.
(c) Notwithstanding the foregoing, if an Indemnified Person
determines in good faith that there is a reasonable probability
that a proceeding may adversely affect it or its affiliates
other than as a result of monetary damages for which it would be
entitled to indemnification under this Agreement, the
Indemnified Person may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such
proceeding, but the indemnifying party will not be bound by any
determination of a proceeding so defended or any compromise or
settlement effected without its consent (which may not be
unreasonably withheld).
9.6 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS. A claim for
indemnification for any matter not involving a third-party claim
may be asserted by notice to the party from whom indemnification
is sought.
10. GENERAL PROVISIONS
10.1 EXPENSES. Each party to this Agreement will bear its
respective expenses incurred in connection with the preparation,
execution, and performance of this Agreement and the
Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants.
10.2 PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated
Transactions will be issued at such time and in such manner as
Buyer determines. Unless consented to by Buyer in advance or
required by applicable law, prior to the Closing Sellers shall,
and shall cause the Company to, keep this Agreement strictly
confidential and may not make any disclosure of this Agreement
to any person. Sellers and Buyer will consult with each other
concerning the means by which the Company's employees,
customers, and suppliers and others having dealings with the
Company will be informed of the Contemplated Transactions, and
Buyer will have the right to be present for any such
communication.
10.3 CONFIDENTIALITY. Between the date of this Agreement and
the Closing Date, Buyer and Sellers will maintain in confidence,
and will cause the directors, officers, employees, agents, and
advisors of Buyer and the Company to maintain in confidence, any
written information stamped "confidential" when originally
furnished by another party in connection with this Agreement or
the Contemplated Transactions, unless (a) such information is
already known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available
through no fault of such party, (b) the use of such information
is necessary or appropriate in making any filing or obtaining
any consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such
information is required by or necessary or appropriate in
connection with legal proceedings. If the Contemplated
Transactions are not consummated, each party will return or
destroy as much of such written information as the other party
may reasonably request.
10.4 NOTICES. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will
be deemed to have been duly given when (a) delivered by hand
(with written confirmation of receipt), (b) delivered by U.S.
certified mail, postage prepaid, which shall be deemed to have
been received on the earlier of the date shown on the receipt or
three (3) business days after the postmarked date thereof, or
(c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses set forth below (or to
such other addresses as a party may designate by notice to the
other parties):
Principal Sellers Robert E. Mazurek
or the Trust: 3409 Donnington Court
Greensboro, North Carolina 27407
with a copy to: Charles A. Alt, Esq.
Wyatt Early Harris & Wheeler, LLP
1912 Eastchester Drive
High Point, North Carolina 27265-1405
Facsimile No.: (910) 889-5232
Buyer: Transit Group, Inc.
3350 Cumberland Circle, Suite 1900
Atlanta, Georgia 30339
Attention: Philip A. Belyew, President
Facsimile No.: (770) 984-5401
with a copy to: G. Donald Johnson, Esq.
Womble Carlyle Sandridge & Rice, PLLC
1275 Peachtree Street, N.E., Suite 700
Atlanta, Georgia 30309
Facsimile No.: (404) 888-7490
10.5 FURTHER ASSURANCES. The parties agree (a) to furnish upon
request to each other such further information, (b) to execute
and deliver to each other such other documents, and (c) to do
such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of
this Agreement and the documents referred to in this Agreement.
10.6 WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the
failure nor any delay by any party in exercising any right,
power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement or the documents referred to
in this Agreement can be discharged by one party, in whole or in
part, by a waiver or renunciation of the claim or right unless
in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific
instance for which it is given; and (c) no notice to or demand
on one party will be deemed to be a waiver of any obligation of
such party or of the right of the party giving such notice or
demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this
Agreement.
10.7 ENTIRE AGREEMENT AND MODIFICATION. This Agreement
supersedes all prior agreements between the parties with respect
to its subject matter (including the Letter of Intent between
Buyer and Sellers dated May 7, 1997) and constitutes (along with
the documents referred to in this Agreement) a complete and
exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may
not be amended except by a written agreement executed by the
party to be charged with the amendment.
10.8 DISCLOSURE LETTER. The disclosures in the Disclosure
Letter, and those in any supplement thereto, relate only to the
representations and warranties in the Section of the Agreement
to which they expressly refer. In the event of any
inconsistency between the statements in the body of this
Agreement and those in the Disclosure Letter (other than an
exception expressly set forth as such in the Disclosure Letter
with respect to a specifically identified representation or
warranty), the statements in the body of this Agreement will
control.
10.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
Neither party may assign any of its rights under this Agreement
without the prior written consent of the other parties. Subject
to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to
give any person other than the parties to this Agreement any
legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This
Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and
their successors and assigns.
10.10 SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction,
the other provisions of this Agreement will remain in full force
and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force
and effect to the extent not held invalid or unenforceable.
10.11 SECTION HEADINGS, CONSTRUCTION. The headings of Sections
in this Agreement are provided for convenience only and will not
affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement
will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms.
10.12 TIME OF ESSENCE. With regard to all dates and time
periods set forth or referred to in this Agreement, time is of
the essence.
10.13 GOVERNING LAW. This Agreement will be governed by the
laws of the State of North Carolina without regard to conflicts
of laws principles.
10.14 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an
original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
BUYER:
TRANSIT GROUP, INC.
f/k/a General Parcel Service, Inc.
(SIGNED)
- ------------------------------
PHILIP A. BELYEW, President
ATTEST
(SIGNED
______________________________
WAYNE N. NELLUMS
[CORPORATE SEAL]
PRINCIPAL SELLERS:
(SIGNED)
______________________________
ROBERT E. MAZUREK
(SIGNED)
______________________________
JOANN MAZUREK
[EXECUTION CONTINUED ON FOLLOWING PAGE]
[EXECUTION CONTINUED FROM PREVIOUS PAGE]
THE TRUST:
THE ROBERT E. MAZUREK AND JOANN E.
MAZUREK IRREVOCABLE UNITRUST
BY: (SIGNED)
____________________________________
_____________________________, Trustee
THE "ESOP":
THE CAROLINA PACIFIC DISTRIBUTORS, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
BY: (SIGNED)
____________________________________
ROBERT E. MAZUREK, Trustee
TRANSIT GROUP, INC.
FOR IMMEDIATE RELEASE
Contacts:
Philip A. Belyew
President and Chief Executive Officer
3350 Cumberland Circle, Suite 1900
Atlanta Georgia 30339
(770) 984-5365
Wayne N. Nellums
Vice President,
Chief Financial Officer
(904) 363-0089
TRANSIT GROUP COMPLETES ACQUISITION
OF CAROLINA PACIFIC DISTRIBUTORS, INC.
COMPANY IN NEGOTIATIONS TO SELL ITS PARCEL BUSINESS
ATLANTA, Georgia (July 14, 1997) - Transit Group, Inc. - (Nasdaq
Small Cap:GPSX), formerly General Parcel Services, Inc., today
announced that it has acquired Carolina Pacific Distributors,
Inc., completing one of four pending acquisitions that the
Company originally announced in May 1997. The acquisition also
includes an additional business and related assets operated
independently by the owners of Carolina Pacific. The
transaction is valued at approximately $11.3 million and
includes a cash payment of approximately $3.5 million, the
issuance of approximately 1,733,000 shares of Transit Group
common stock.
Carolina Pacific, which has been in business for more than 20
years, is a privately held truckload carrier based in Highpoint,
North Carolina. With approximately 140 trucks, Carolina Pacific
provides dry van and refrigerated transportation services
between major markets in the Carolinas and the West Coast. The
company's revenues, together with those generated by the
additional assets acquired from the owners of Carolina Pacific,
totaled approximately $13.5 million in 1996. For 1996, Transit
Group reported total revenue of $23.4 million.
Commenting on the announcement, Philip A. Belyew, President and
Chief Executive Officer of the Company, said, "The completion of
this first acquisition signals a new strategic direction for the
Company as we begin to build a significant presence in the
truckload motor carrier industry. We continue to work toward
completing the three pending acquisitions we
- -MORE-
GPSX Completes Acquisition
Page 2
July 14, 1997
announced several weeks ago, subject to ongoing negotiations of
definitive acquisition agreements, arrangement of financing, and
other customary terms and conditions. Currently, we anticipate
that these three remaining acquisitions - which will add
approximately $90 million in annual revenue to the Company -
will be completed by early August 1997."
To Capitalize on opportunities created by consolidation in the
transportation industry, Transit Group's new strategy involves
the acquisition of profitable short- and long-haul trucking
companies, particularly truckload carriers based in the
southeastern United States. The Company's acquisition criteria
remains focused on mid-size trucking companies with annual
revenues between $10 million and $100 million.
Separately, Transit Group announced that it is currently
negotiating for the possible sale of its parcel delivery
business. The sale of its parcel business, the Company's
largest nontrucking operations, would virtually complete Transit
Group's transformation into a holding company for truckload
carriers and is expected to eliminate approximately $2.25
million in existing Company debt. Transit Group's parcel
delivery business accounted for substantially all of the
Company's $23.4 million in revenues for 1996 and the net loss of
$5.1 or $1.48 per share reported for that year.
Comments in this news release regarding the Company's business
which are not historical facts are forward looking statements
that involve risks and uncertainties. Among these risks are
that the Company is in a highly competitive business, has
history of operating losses, and is pursuing a growth strategy
that relies in part on the completion of acquisitions of
companies in the trucking industry. There can be no assurance
that in its highly competitive business environment, the Company
will successfully improve its operating profitability or
consummate such acquisitions.
Transit Group changed its name from General Parcel Services
effective June 30, 1997, as part of the Company's strategy to
pursue growth opportunities in the trucking industry. With
headquarters in Atlanta, Georgia, the Company currently has
operations in Florida, Georgia and North Carolina.
- -END-
