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): December 30, 1997
TRANSIT GROUP, INC.
(Exact name of Registrant as specified in its charter)
Florida 33-30123-A 58-2576629
(State or other jurisdiction of (Commission File No.) (IRS Employer
incorporation or organization) Identification No.)
2859 Paces Ferry Road
Suite 1740
Atlanta, Georgia 30339
(Address of principal executive offices, including zip code)
(770) 444-0240
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 30, 1997, Transit Group, Inc. ("Transit Group")
consummated the acquisition of Rainbow Trucking Services, Inc., an Indiana
corporation ("Rainbow Trucking"). Pursuant to the Agreement and Plan of
Reorganization, a wholly-owned Indiana subsidiary of Transit Group was merged
with and into Rainbow Trucking in a reverse triangular merger, with Rainbow
Trucking remaining as the surviving corporation of the merger. Upon consummation
of the merger, all of the outstanding common stock of Rainbow Trucking was
converted into 339,623 shares of Transit Group common stock.
On December 30, 1997, Transit Group also consummated the acquisition
of Hawks Enterprises, Inc., a Kentucky corporation ("Hawks Enterprises").
Pursuant to the Agreement and Plan of Reorganization, a wholly-owned Kentucky
subsidiary of Transit Group was merged with and into Hawks Enterprises in a
reverse triangular merger, with Hawks Enterprises remaining as the surviving
corporation of the merger. Upon consummation of the merger, all of the
outstanding common stock of Hawks Enterprises was converted into 188,679 shares
of Transit Group common stock.
In addition, on December 30, 1997, Transit Group consummated the
acquisition of T.W. Transport, Inc., a Kentucky corporation ("T.W. Transport").
Pursuant to the Agreement and Plan of Reorganization, a wholly-owned Kentucky
subsidiary of Transit Group was merged with and into T.W. Transport in a reverse
triangular merger, with T.W. Transport remaining as the surviving corporation of
the merger. Upon consummation of the merger, all of the outstanding common stock
of T.W. Transport was converted into 150,943 shares of Transit Group common
stock.
Rainbow Trucking, a privately held full load, long haul trucking
company, and its two affiliate companies, Hawks Enterprises and T.W. Transport,
are based in Louis~ille, Kentucky.
On December 31, 1997, Transit Group entered into a definitive
agreement with General Parcel Corporation, a Florida corporation ("General
Parcel") owned and controlled by T. Wayne Davis, Chairman of the Board of
Transit Group, for the purchase by General Parcel of all of Transit Group's
fixed assets used in the operations of the parcel delivery business and the
courier business. Pursuant to the Asset Purchase Agreement effective as of
September 30, 1997, General Parcel shall assume certain liabilities of Transit
Group, as well as assume Transit Group's obligations under capital equipment
leases and facility leases relating to its parcel delivery business and courier
business. The sale is subject to third party approvals and other customary
conditions. General Parcel shall receive 870,000 shares of Transit Group common
stock.
Transit Group, headquartered in Atlanta, Georgia is a holding company
in the business of acquiring and consolidating short- and long-haul trucking
companies.
<PAGE>
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 Rainbow Trucking, Hawks Enterprises and T.W. Transport
relative to their respective acquisitions as required by Article 11 of
Regulation S-X and this Item 7 of Form 8-K. Transit Group will file such
financial information under cover of a Form 8-K/A as soon as practicable, but
not later than March 15, 1998 (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 Rainbow Trucking, Hawks Enterprises and
T.W. Transport acquisitions 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 March 15,
1998 (60 days after this Report is required to be filed).
(c) Exhibits
2.1 Agreement and Plan of Reorganization dated December 12, 1997, by
and among Transit Group, Rainbow Trucking, and Ellena A. Hawkins, as amended by
First Amendment thereto dated December 30, 1997.
2.2 Agreement and Plan of Reorganization dated December 12, 1997, by
and among Transit Group, Hawks Enterprises and Robert L. Hawkins.
2.3 Agreement and Plan of Reorganization dated December 12, 1997, by
and among Transit Group, T.W. Transport and Timothy M. Weller.
2.4 Asset Purchase Agreement effective as of September 30, 1997, by
and between Transit Group and General Parcel.
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: January 13, 1998 /s/ Philip A. Belyew
---------------------
Philip A. Belyew
President and Chief Executive Officer
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
[Stock for Stock - Reverse Triangular Merger]
BETWEEN
Transit Group, Inc., a Florida corporation,
Rainbow Trucking Services, Inc., an Indiana corporation,
and Ellena A. Hawkins, an individual resident of Florida
DATED: December 12, 1997
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS........................................................1
2. PLAN OF REORGANIZATION.............................................3
----------------------
2.1 THE MERGER................................................3
2.2 FRACTIONAL SHARES.........................................4
2.3 EFFECTS OF THE MERGER.....................................4
2.4 TAX-FREE REORGANIZATION...................................4
2.5 PURCHASE ACCOUNTING TREATMENT.............................4
2.6 WAIVER OF DISSENTERS RIGHTS...............................5
2.7 CLOSING...................................................5
2.8 CLOSING OBLIGATIONS.......................................5
3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER......................6
---------------------------------------------
3.1 ORGANIZATION AND GOOD STANDING............................6
3.2 AUTHORITY; NO CONFLICT....................................6
3.3 CAPITALIZATION............................................7
3.4 FINANCIAL STATEMENTS......................................7
3.5 BOOKS AND RECORDS.........................................7
3.6 TITLE TO PROPERTIES; ENCUMBRANCES.........................8
3.7 CONDITION AND SUFFICIENCY OF ASSETS.......................8
3.8 ACCOUNTS RECEIVABLE.......................................8
3.9 NO UNDISCLOSED LIABILITIES................................8
3.10 TAXES.....................................................9
3.11 NO MATERIAL ADVERSE CHANGE................................9
3.12 EMPLOYEE BENEFITS.........................................9
3.13 COMPLIANCE...............................................10
3.14 LITIGATION...............................................10
3.15 ABSENCE OF CHANGES.......................................10
3.16 CONTRACTS; NO DEFAULTS...................................11
3.17 INSURANCE................................................12
3.18 ENVIRONMENTAL MATTERS....................................13
3.19 EMPLOYEES; INDEPENDENT CONTRACTORS.......................13
3.20 LABOR RELATIONS; COMPLIANCE..............................14
3.21 INTELLECTUAL PROPERTY....................................14
3.22 RELATIONSHIPS WITH RELATED PERSONS.......................15
3.23 BROKERS OR FINDERS.......................................15
3.24 DISCLOSURE...............................................15
3.25 SUBSIDIARIES.............................................15
3.26 MERGER WITH RAINBOW GROUP................................15
i
<PAGE>
4. REPRESENTATIONS AND WARRANTIES OF TGI.............................16
-------------------------------------
4.1 ORGANIZATION AND GOOD STANDING...........................16
4.2 AUTHORITY; NO CONFLICT...................................16
4.3 CERTAIN PROCEEDINGS......................................17
4.4 BROKERS OR FINDERS.......................................17
4.5 SEC FILINGS..............................................17
4.6 TGI STOCK................................................17
4.7 DISCLOSURE...............................................17
5. COVENANTS OF SHAREHOLDER AND TGI..................................17
--------------------------------
5.1 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS...............17
5.2 SEC REPORTING............................................17
5.3 DUE DILIGENCE............................................17
5.4 RELEASE OF GUARANTORS....................................18
5.5 AMENDMENT TO LEASE.......................................18
5.6 RAINBOW GROUP MERGER.....................................18
5.7 LOAN TO SHAREHOLDER......................................18
6. CONDITIONS PRECEDENT TO TGI'S OBLIGATION TO CLOSE.................18
-------------------------------------------------
6.1 ACCURACY OF REPRESENTATIONS..............................18
6.2 SHAREHOLDER'S PERFORMANCE................................19
6.3 CONSENTS.................................................19
6.4 ADDITIONAL DOCUMENTS.....................................19
6.5 NO PROCEEDINGS...........................................19
6.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS......19
6.7 DUE DILIGENCE............................................20
6.8 CONCURRENT CLOSING.......................................20
6.9 BOARD APPROVAL...........................................20
7. CONDITIONS PRECEDENT TO SHAREHOLDER'S OBLIGATION TO CLOSE.........20
---------------------------------------------------------
7.1 ACCURACY OF REPRESENTATIONS..............................20
7.2 TGI'S PERFORMANCE........................................20
7.3 CONSENTS.................................................20
7.4 ADDITIONAL DOCUMENTS.....................................20
7.5 NO PROCEEDINGS...........................................21
7.6 CONCURRENT CLOSING.......................................21
7.7 NO MATERIAL ADVERSE CHANGE...............................21
8. TERMINATION.......................................................21
8.1 TERMINATION EVENTS.......................................21
8.2 EFFECT OF TERMINATION....................................21
ii
<PAGE>
9. INDEMNIFICATION; REMEDIES.........................................22
9.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY
KNOWLEDGE................................................22
9.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SHAREHOLDER
........................................................22
9.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY TGI............23
9.4 TIME LIMITATIONS.........................................23
9.5 ESCROW...................................................23
9.6 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS........24
9.7 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS..............25
9.8 REMEDY...................................................25
10. GENERAL PROVISIONS................................................25
------------------
10.1 EXPENSES.................................................25
10.2 PUBLIC ANNOUNCEMENTS.....................................25
10.3 CONFIDENTIALITY..........................................26
10.4 NOTICES..................................................26
10.5 JURISDICTION; SERVICE OF PROCESS.........................27
10.6 FURTHER ASSURANCES.......................................27
10.7 WAIVER...................................................27
10.8 ENTIRE AGREEMENT AND MODIFICATION........................27
10.9 COMPANY DISCLOSURE LETTER................................28
10.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.......28
10.11 SEVERABILITY.............................................28
10.12 SECTION HEADINGS, CONSTRUCTION...........................28
10.13 TIME OF ESSENCE..........................................28
10.14 GOVERNING LAW............................................28
10.15 COUNTERPARTS.............................................28
iii
<PAGE>
Agreement and Plan of Reorganization
This Agreement and Plan of Reorganization ("Agreement") is made as of
December 12, 1997, by Transit Group, Inc., a Florida corporation ("TGI"),
Rainbow Trucking Services, Inc., an Indiana corporation (the "Company"), and
Ellena A. Hawkins, an individual resident of Florida ("Shareholder").
RECITALS
A. The parties intend that, subject to the terms and conditions set
forth herein, a new corporation that will be organized under Indiana law as a
wholly owned subsidiary of TGI ("Newco") will merge with and into the Company in
a reverse triangular merger (the "Merger"), with the Company to be the surviving
corporation of the Merger, all pursuant to the terms and conditions of this
Agreement, the Articles of Merger substantially in the form of Exhibit A hereto
(the "Articles of Merger") and the applicable provisions of the laws of Indiana.
B. Upon the effectiveness of the Merger, all the outstanding capital
stock of the Company will be converted into capital stock of TGI, in the manner
and on the basis determined herein and as provided in the Articles of Merger.
C. The Merger is intended to be treated as a "purchase" for accounting
purposes and a tax-free reorganization pursuant to the provisions of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"), by
virtue of the provisions of Section 368(a)(2)(D) of the Code.
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 Agreement and Plan of Reorganization together with
all Schedules and Exhibits hereto.
"Balance Sheet"--as defined in Section 3.4.
"Closing"--as defined in Section 2.7.
1
<PAGE>
"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.
"Company Disclosure Letter"--the disclosure letter delivered by the
Shareholder to TGI concurrently with the execution and delivery of this
Agreement.
"Contemplated Transactions"--all of the transactions contemplated by
this Agreement, including:
(a) the merger of Newco and the Company;
(b) the execution, delivery, and performance of the
Noncompetition Agreement, Subscription Agreement and the Escrow Agreement;
(c) the loan by TGI to the Shareholder; and
(d) the performance by TGI, the Company and the Shareholder of
their respective covenants and obligations under this Agreement.
"Damages"--as defined in Section 9.2.
"Effective Time" --the effective time of the Merger as defined in
Section 2.1.
"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
2
<PAGE>
(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.
"Escrow Agreement" --as defined in Section 2.8(a)(iv).
"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.
"Merger"--as defined in the Recitals hereto.
"Noncompetition Agreement"--as defined in Section 2.8(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, 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.
"TGI"--as defined in the first paragraph of this Agreement.
2. PLAN OF REORGANIZATION.
2.1 THE MERGER. Subject to the terms and conditions of this Agreement,
prior to the Closing Date, TGI will incorporate and organize Newco and will
cause the Board of Directors and shareholders of Newco to approve the Merger and
perform all of the duties of Newco set forth in this Agreement. Subject to the
terms and conditions of this Agreement, the Articles of Merger will be filed
with the Secretary of State of the State of Indiana on the Closing Date. The
date and time that the Articles of Merger is filed with the Indiana Secretary of
State and the Merger thereby becomes effective will be referred to in this
Agreement as the "Effective Time." Subject to the terms and conditions of this
Agreement and the Articles of Merger, Newco will be merged with and into the
Company in a statutory merger pursuant to the Articles of Merger and in
accordance with applicable provisions of Indiana law as follows:
(a) Conversion of Company Common Stock. The shares of common stock of
the Company, no par value (the "Company Common Stock"), that are issued and
outstanding
3
<PAGE>
immediately prior to the Effective Time, will, by virtue of the Merger and at
the Effective Time and without further action on the part of any holder thereof,
be converted into that number of shares of fully paid and nonassessable common
stock of TGI, $.01 par value per share ("TGI Common Stock"), determined by
dividing US Two Million Two Hundred Fifty Thousand Dollars ($2,250,000) by
$6.625, for a total of 339,623 shares of TGI Common Stock.
(b) Conversion of Newco Shares. Each share of Newco Common
Stock, par value $0.01 ("Newco Common Stock"), that is issued and outstanding
immediately prior to the Effective Time, will, by virtue of the Merger and
without further action on the part of the sole shareholder of Newco, be
converted into and become one share of common stock of the Company, as the
surviving corporation, that is to be issued and outstanding immediately after
the Effective Time, which shall be the only share of Company Common Stock that
is issued and outstanding immediately after the Effective Time.
2.2 FRACTIONAL SHARES. No fractional shares of TGI Common Stock will
be issued in connection with the Merger.
2.3 EFFECTS OF THE MERGER. At the Effective Time: (a) the separate
existence of Newco will cease and Newco will be merged with and into the Company
and the Company will be the surviving corporation pursuant to the terms of the
Articles of Merger; (b) the Articles of Incorporation and Bylaws of Newco will
be the Articles of Incorporation and Bylaws of the surviving corporation; (c)
each share of Newco Common Stock outstanding immediately prior to the Effective
Time will be converted as provided in Section 2.1(b) above; (d) the directors of
Newco in effect at the Effective Time will be the directors of the Company as
the surviving corporation, and the officers of Newco will be the officers of the
Company as the surviving corporation; (e) each share of Company Common Stock
outstanding immediately prior to the Effective Time will be converted as
provided in Section 2.1(a); and (f) the Merger will, at and after the Effective
Time, have all of the effects provided by applicable law.
2.4 TAX-FREE REORGANIZATION. The parties intend to adopt this Agreement
as a tax-free plan of reorganization and to consummate the Merger in accordance
with the provisions of Section 368(a)(1)(A) of the Code. The parties believe
that the value of the TGI Common Stock to be received in the Merger is equal to
the value of the Company Common Stock to be surrendered in exchange therefor.
The TGI Common Stock issued in the Merger will be issued solely in exchange for
the Company Common Stock, and no other transaction other than the Merger
represents, provides for or is intended to be an adjustment to, the
consideration paid for the Company Common Stock. TGI represents now, and as of
the Closing, that it presently intends to continue the Company's historic
business or use a significant portion of the Company's business assets in a
business. The Shareholder acknowledges that it has no present plan or intention
to sell, exchange or dispose of more than 50% of the shares of TGI Common Stock
received in the Merger. The provisions and representations contained or referred
to in this Section 2.4 shall survive until the expiration of the applicable
statute of limitations. The Shareholder acknowledges that she has received her
own independent tax advice and counsel with respect to the Merger and the
transactions
4
<PAGE>
contemplated herein and is not relying on representations made by TGI or its
counsel, accountants or advisors with respect to such tax matters.
2.5 PURCHASE ACCOUNTING TREATMENT. The parties intend that the Merger
be treated as a "purchase" for accounting purposes.
2.6 WAIVER OF DISSENTERS RIGHTS. The Shareholder hereby waives any and
all rights she has to dissent from the Merger under Indiana law.
2.7 CLOSING. The consummation of the purchase and sale provided for
in this Agreement (the "Closing") will take place at the offices of TGI's
counsel, Womble Carlyle Sandridge & Rice, PLLC, located at Suite 700, 1275
Peachtree Street, N.E., Atlanta, Georgia 30309, at 10:00 a.m. (local time) on
December 31, 1997, or at such time and place as the parties may agree.
2.8 CLOSING OBLIGATIONS. At the Closing:
(a) The Shareholder will deliver to TGI:
(i) certificates representing her shares of Company
Common Stock, duly endorsed for transfer to TGI (or
accompanied by duly executed stock powers);
(ii) releases and resignations from the officers and
directors of the Company duly executed by such parties;
(iii) a noncompetition agreement in the form of
Exhibit "B," executed by the Shareholder (the "Noncompetition
Agreement");
(iv) an escrow agreement in the form of Exhibit "C,"
executed by the Shareholder (the "Escrow Agreement");
(v) a subscription agreement for the shares of TGI
Common Stock to be issued in the Merger in the form of Exhibit
"D" (the "Subscription Agreement");
(vi) a promissory note in the amount of $300,000 in
the form of Exhibit "E," executed by the Shareholder,
guaranteed by Robert L. Hawkins, and secured by a pledge of
TGI Common Stock, issued to the Shareholder in connection
herewith (the "Shareholder's Promissory Note") in
consideration of a loan by TGI to the Shareholder in the
amount of $300,000; and
(vii) an unconditional guarantee (the "Guarantee") of
the $200,000 Promissory Note of Robert L. Hawkins to TGI in a
form to be agreed upon.
5
<PAGE>
(b) TGI will deliver to the Shareholder a share certificate
representing the TGI Common Stock issued in the Merger in the name of the
Shareholder, and the face amount of the Shareholder's Promissory Note in cash.
3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
The Shareholder represents and warrants to TGI as follows:
3.1 ORGANIZATION AND GOOD STANDING.
(a) Part 3.1 of the Company 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 Shareholder has delivered to TGI 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 Shareholder, enforceable against her in accordance with its
terms. Upon the execution and delivery by the Shareholder of the Escrow
Agreement, the Noncompetition Agreement, the Shareholder's Promissory Note, the
Guarantee and the Subscription Agreement (collectively, the "Shareholder's
Closing Documents"), the Shareholder's Closing Documents will constitute the
legal, valid, and binding obligations of the Shareholder, enforceable against
her in accordance with their respective terms. The Shareholder has the absolute
and unrestricted right, power, authority, and capacity to execute and deliver
this Agreement and the Shareholder's Closing Documents and to perform her
obligations under this Agreement and the Shareholder's Closing Documents.
(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
6
<PAGE>
requirements of, 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 Company Disclosure
Letter, neither the Shareholder 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 one thousand (1,000) shares of common stock, no par value per share,
of which one hundred (100) shares are issued and outstanding and constitute the
"Shares." The Shareholder is and will be on the Closing Date the record and
beneficial owner and holder of the Shares, free and clear of all liens, claims
or encumbrances. With the exception of the Shares (which are owned by the
Shareholder), there are no other outstanding equity securities or other
securities of the Company. Other than standard legends with respect to
securities matters, 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 Shareholder has delivered to TGI: (a)
unaudited balance sheet of the Company as at December 31, 1996, and the related
unaudited statements of income, changes in stockholders' equity, and cash flow
for the fiscal year then ended, and (b) a balance sheet of the Company as at
September 30, 1997 (the "Balance Sheet") and an income statement for the nine
(9) month period then ended. 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, all in accordance
with sound 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 TGI, are
7
<PAGE>
complete and correct in all material respects and have been maintained in
accordance with applicable law. The minute books of the Company contain accurate
and complete records of all meetings of, and corporate actions taken by, the
stockholders, the Boards of Directors, and committees of the Boards of Directors
of the Company, and no meeting of any such stockholders, Board of Directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minute books.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES. 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, and acquired all such assets in
a bona fide transaction for fair value. All material properties and assets of
the Company are listed on Part 3.6(a) of the Company's Disclosure Letter and,
except as set forth on Part 3.6(b) of the Company Disclosure Letter, are free
and clear of all liens, claims or encumbrances and are not, to the best of the
Shareholder's knowledge, 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 identified 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 impair the present
or anticipated use of the property subject thereto. All buildings, plants, and
structures owned by the Company lie wholly within the boundaries of the real
property owned by the Company and do not encroach upon the property of, or
otherwise conflict with the property rights of, any other person.
3.7 CONDITION AND SUFFICIENCY OF ASSETS. Except as set forth on Part
3.7 of the Company Disclosure Letter, the buildings, plants, structures, and
equipment owned or leased by the Company are, to the best of the Shareholder's
knowledge, structurally sound, are not in need of extraordinary 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 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 if conducted in substantially the same manner as conducted
prior to the Closing. The lease for the Company's facility located at Ralph
Avenue, Louisville, Kentucky (the "Facility Lease"), is in full force and effect
and is on market rates and terms for comparable facilities in the surrounding
area.
3.8 ACCOUNTS RECEIVABLE. All accounts receivable of the Company as of
the date hereof and 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, except
as set forth on Part 3.8 of the Company Disclosure Letter, the accounts
receivable are or will be as of the Closing Date current and collectible net of
the respective reserves
8
<PAGE>
shown on the Balance Sheet. There is no contest, claim, or right of set-off
relating to the amount or validity of such accounts receivable.
3.9 NO UNDISCLOSED LIABILITIES. The Company has no material liabilities
or obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent, or otherwise) except for liabilities or obligations (i)
reflected or reserved against in the Balance Sheet; (ii) current liabilities not
in excess of $25,000, individually or in the aggregate, incurred in the ordinary
course of business since the date thereof; or (iii) specifically disclosed
herein or in Part 3.9 of the Company Disclosure Letter.
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) Except as set forth on Part 3.10 of the Company Disclosure
Letter, no United States, federal or state income tax returns of the Company
have been audited by the IRS or relevant state tax authorities. Neither the
Shareholder 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) The Shareholder has delivered to TGI true and accurate
copies of all federal and state tax returns for the Company for each of the
three years ended December 31, 1994, 1995 and 1996. 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. Except as set forth on Part 3.11 of
the Company Disclosure Letter, 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 the Shareholder knows of no
event which has occurred or circumstance which exists that may result in such a
material adverse change.
3.12 EMPLOYEE BENEFITS. Part 3.12 of the Company 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
9
<PAGE>
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. Plans as defined hereunder shall not include such
plans maintained by Laxus Group, from whom the Company leases certain of its
employees, and with respect to which the Company has no liability. 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 substantial compliance with all
applicable laws.
(b) Part 3.13 of the Company 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 Company Disclosure
Letter, there is no pending or to the knowledge of the Shareholder, 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.
10
<PAGE>
(b) There is no order or court decision to which the Company,
the Shareholder or, to the knowledge of the Shareholder, 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. 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 payments and increases 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 at least $25,000 other than
the entry into contracts with customers for the provision of transportation
services by the Company in the ordinary course of business;
(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.
11
<PAGE>
(a) Part 3.16 of the Company Disclosure Letter contains a
complete and accurate list, and the Shareholder has delivered to TGI true and
complete copies, of:
(i) (x) each contract that involves performance of
services or delivery of goods or materials to the Company of an amount
or value in excess of $25,000; (y) each contract with the Company's ten
(10) largest customers (based on 1997 revenue to date) that involves
the performance of services by the Company in an amount or value
exceeding $25,000;
(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 Company 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 compliance with all material applicable terms and
requirements of each contract. To the best of the Shareholder's knowledge, each
third party to any contract with the Company is, and at all times has been, in
compliance with all material 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 material default or event of default has occurred
thereunder.
3.17 INSURANCE.
(a) The Shareholder has delivered to TGI 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 two (2) years
preceding the date of this Agreement, and true and complete copies of all
pending applications for policies of insurance.
12
<PAGE>
(b) Except as set forth on Part 3.17 of the Company Disclosure
Letter, all policies to which the Company is a party or that provide coverage to
either the Shareholder, the Company, or any director or officer of the Company
(i) are valid, outstanding, and enforceable; (ii) in the Shareholder's judgment,
are issued by an insurer that is financially sound and reputable; (iii) provide
adequate insurance coverage, in the Shareholder's judgment, for the assets and
the operations of the Company for all risks normally insured against in the
Company's industry; (iv) will not be terminated or subject to termination as a
result of the consummation of the Contemplated Transactions; and (v) except for
the amounts indicated on Part 3.17 of the Company Disclosure Letter, do not
provide for any retrospective premium adjustment or other experienced-based
liability on the part of the Company.
(c) Except as set forth on Part 3.17 of the Company's
Disclosure Letter, neither the Shareholder 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) Except as set forth on Part 3.18 of the Company Disclosure
Letter, the Company is, and at all times has been, in substantial compliance
with, and has not been and is not in violation of or liable under, any
Environmental Law. The Shareholder has no basis to expect, nor has the
Shareholder 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 Company Disclosure
Letter, (i) there are no Hazardous Materials present on or at the facilities
owned or leased by the Company, except such Hazardous Materials as are commonly
used in the operation of a transportation business and which are maintained and
used by the Company in compliance with applicable law, or (ii) to the knowledge
of the Shareholder, 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.
(c) The Shareholder has delivered to TGI true and complete
copies and results of any reports, studies, analyses, tests, or monitoring
possessed or initiated by the Shareholder or the
13
<PAGE>
Company pertaining to Hazardous Materials in, on, or under the facilities owned
or leased by the Company.
3.19 EMPLOYEES; INDEPENDENT CONTRACTORS.
(a) To the knowledge of the Shareholder, no employee or
independent contractor 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 her duties to the Company, or (ii) the ability of
the Company to conduct its business.
(b) All persons rendering services to the Company have been
properly characterized and treated as either employees or independent
contractors, and the Company has not received notice of, nor does the
Shareholder 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, to the Shareholder's knowledge, 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 substantially complied in all respects with the 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.
(b) The Company is, and at all times has been, in substantial
compliance with, and has not been and is not in violation of or liable under,
any Occupational Safety and Health Law. The Shareholder has no basis to expect,
nor has the Shareholder 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:
14
<PAGE>
(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 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 set forth on Part
3.22 of the Disclosure Letter, neither the Shareholder nor any related person or
affiliate of the Shareholder or of the Company has, or has had, any interest in
any property used in the Company's business. Neither the Shareholder nor any
related person or affiliate of the Shareholder 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 (a) had business dealings or a material
financial interest in any transaction with the Company; or (b) engaged in
competition with the Company with respect to any line of the products or
services of the Company. Neither the Shareholder nor any related person or
affiliate of the Shareholder or of the Company is a party to any contract with
the Company.
3.23 BROKERS OR FINDERS. Neither the Company, the Shareholder nor 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.
3.24 DISCLOSURE. No representation or warranty of the Shareholder in
this Agreement and no statement in the Company 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 Shareholder that has specific application to the Shareholder or the
Company (other than general economic or industry conditions) and that materially
adversely affects or, as far as the Shareholder 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 Company Disclosure Letter.
3.25 SUBSIDIARIES. The Company has no subsidiaries.
15
<PAGE>
3.26 MERGER WITH RAINBOW GROUP. The Company currently contemplates the
merger of Rainbow Group, Inc. ("Rainbow Group") with and into the Company
pursuant to an Agreement and Plan of Merger by an between the Company and
Rainbow Group to be entered into prior to the Closing Date (the "Rainbow Merger
Agreement"). The Rainbow Merger Agreement, when entered into, will constitute
the legal, valid, and binding obligations of the Company and Rainbow Group,
enforceable against each in accordance with its terms. The Rainbow Merger
Agreement will be properly executed by duly authorized officers of the
respective parties thereto and will be sufficient to transfer to the Company
good and marketable title to all of the assets and properties of Rainbow Group,
whether tangible or intangible, real or personal, choate or inchoate, fixed or
contingent, of every kind and description and wherever situated, other than as
set forth on Part 3.26 of the Company Disclosure Letter, which shall be
distributed to the shareholder of Rainbow Group prior to said merger. The merger
of the Company and Rainbow Group will have occurred prior to the Closing Date
and the merger contemplated thereby will be effective under Indiana law prior to
such time. The terms of the Rainbow Merger Agreement will provide that the
Company will be fully and completely indemnified by the shareholders of Rainbow
Group for any damages relating to any breach of any representation, warrant,
covenant or obligation or any liability of Rainbow Group arising prior to the
date of said merger, other than those specifically identified and agreed to in
the Rainbow Merger Agreement.
4. REPRESENTATIONS AND WARRANTIES OF TGI
TGI has delivered to the Shareholder herewith TGI's Disclosure Letter.
TGI represents and warrants to the Shareholder as follows:
4.1 ORGANIZATION AND GOOD STANDING. TGI 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 TGI, enforceable against TGI in accordance with its terms. TGI 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
TGI nor the consummation or performance of any of the Contemplated Transactions
by TGI will contravene, conflict with, result in a violation of or give any
person the right to prevent, delay, or otherwise interfere with any of the
Contemplated Transactions pursuant to:
(i) any provision of TGI's Articles of Incorporation or
Bylaws;
(ii) any resolution adopted by the board of directors
or the stockholders of TGI;
16
<PAGE>
(iii) any legal requirement or order to which TGI may
be subject; or
(iv) any contract to which TGI is a party or by which
TGI may be bound.
(c) TGI is not and will not 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.
4.3 CERTAIN PROCEEDINGS. There is no pending proceeding that has been
commenced against TGI and that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions.
4.4 BROKERS OR FINDERS. Except as set forth in Schedule 4.4, TGI 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.
4.5 SEC FILINGS. TGI has filed all reports required to be filed prior
to the date hereof under the Securities Exchange Act of 1934, as amended. All
such filings complied in all material respects with applicable law, and no such
filing contained a material misstatement or omission on the date of such filing.
Since their respective filing dates, no event has occurred of which TGI has
knowledge which would result in TGI's being required to amend any such reports.
4.6 TGI STOCK. Upon consummation of the Merger and fulfillment of the
conditions set forth herein, the shares of TGI Common Stock to be issued to the
Shareholder in connection with the Merger will be fully paid, duly authorized,
validly issued and non-assessable. The delivery by TGI of the TGI Common Stock
to the Shareholder will transfer and convey to the Shareholder valid title to
such TGI Common Stock, free and clear of all liens, pledges, encumbrances and
claims of any kind, except restrictions referred to in this Agreement and under
applicable securities laws. All voting rights of TGI are vested exclusively in
the TGI Common Stock.
4.7 DISCLOSURE. No representation or warranty of TGI in this Agreement
or in the TGI Disclosure Letter contains a material misstatement or omits a
material fact necessary to make the statements herein or therein not misleading.
5. COVENANTS OF SHAREHOLDER AND TGI
5.1 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. Except as expressly
provided in this Agreement, the Shareholder will cause all indebtedness owed to
the Company by the Shareholder or any related person of the Shareholder to be
paid in full prior to Closing.
17
<PAGE>
5.2 SEC REPORTING. TGI agrees to file all reports required under the
Securities Exchange Act of 1934, as amended, and, at the expense of the
Shareholder to take such other steps as necessary to allow the Shareholder to
avail herself of the resale provisions of Rule 144.
5.3 DUE DILIGENCE. The Company agrees that TGI may, prior to the
Closing Date, through its representatives, make such investigation of the
properties, books and records of the Company and of its financial and legal
condition as TGI may deem necessary or advisable in order to familiarize itself
with the Company. TGI agrees that it shall conduct its investigation in such a
manner as to minimize disruption to the Company's business.
5.4 RELEASE OF GUARANTORS. TGI, the Company and the Shareholder will
work together in good faith to obtain the release prior to the Closing Date of
any personal guarantees provided by the Shareholder to a third party with
respect to any debt or obligation of the Company. In the event such release has
not been obtained prior to the Closing, TGI agrees to obtain such release
thereafter within thirty (30) days following the receipt of all necessary
information related thereto from the Shareholder. Until such time as all such
Shareholder guarantees have been fully released or the underlying obligations
fully satisfied, TGI will cause the Company to perform all obligations
thereunder and will fully indemnify the Shareholder against any loss, claim or
payment made with respect thereto.
5.5 AMENDMENT TO LEASE. Shareholder and the Company shall amend the
Facility Lease prior to Closing to provide for a term of eighteen (18) months
following the Closing Date at a monthly rental of $4,000 per month.
5.6 RAINBOW GROUP MERGER. The Shareholder and the Company shall cause
the Rainbow Group Merger Agreement to be entered into and performed and the
merger contemplated thereunder to be consummated prior to the Closing Date, all
on terms satisfactory to TGI in its sole discretion.
5.7 LOAN TO SHAREHOLDER. TGI agrees to deliver to the Shareholder on
the Closing Date, in exchange for, and in accordance with the terms and
conditions of, the Shareholder's Promissory Note in the form of Exhibit "E",
which shall be secured by Shareholder's pledge of the Escrow Shares as provided
in Section 9.5 hereof, the sum of US Three Hundred Thousand Dollars ($300,000).
The Shareholder's Promissory Note shall be non-recourse to the extent that on
the maturity date of the Shareholder's Promissory Note, the per share closing
trade price of the TGI Common Stock, as defined in the Wall Street Journal, is
less than Six and 625/1000 Dollars ($6.625) per share. The parties acknowledge
that the loan described herein is not intended to serve as additional merger
consideration and is intended to be repaid in cash in accordance with its terms.
18
<PAGE>
6. CONDITIONS PRECEDENT TO TGI'S OBLIGATION TO CLOSE
TGI's obligation to consummate the Merger and to take the other actions
required to be taken by TGI 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 TGI, in whole or in part):
6.1 ACCURACY OF REPRESENTATIONS. All of the Shareholder'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, without giving effect to
any supplement to the Company Disclosure Letter. TGI acknowledges that the
Company Disclosure Letter shall be updated for the merger of the Company with
Rainbow Group, Inc. and may otherwise be updated as of the Closing Date, but
such update must be satisfactory to TGI in its sole discretion.
6.2 SHAREHOLDER'S PERFORMANCE. All of the covenants and obligations
that the Company and the Shareholder 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, including, without limitation,
those set forth in Article V hereof.
6.3 CONSENTS. Each of the consents identified in Part 3.2 of the
Company 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 TGI:
(a) an opinion of counsel to the Company and the Shareholder,
dated the Closing Date, in form acceptable to TGI;
(b) an opinion of counsel to Rainbow Group and its owners, dated
the closing date of the Rainbow Merger Agreement,in a form agreeable to TGI; and
(c) a certificate of the Shareholder (i) evidencing the accuracy
of any of the Shareholder's representations and warranties; (ii) evidencing the
performance by the Shareholder of, or the compliance by the Shareholder with,
any covenant or obligation required to be performed or complied with by the
Shareholder; (iii) evidencing the satisfaction of any condition referred to in
this Section 6; and (iv) 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 TGI or the Shareholder or the Company,
or against any person affiliated with TGI or the Shareholder 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
19
<PAGE>
(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 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 Merger consideration provided for herein.
6.7 DUE DILIGENCE. TGI shall have completed its investigation of the
Company's assets, business and financial condition and shall, in its sole
discretion exercised in good faith, be satisfied with the results thereof.
6.8 CONCURRENT CLOSING. The transactions contemplated by the Agreement
and Plan of Reorganization dated December 12, 1997, by and between TGI and
Hawk Enterprises, Inc. and the Agreement and Plan of Reorganization dated
December 12, 1997, by and between TGI and T.W. Transport, Inc. shall have
been consummated on or before the Closing Date.
6.9 BOARD APPROVAL. The Board of Directors of TGI shall have approved
the Merger.
7. CONDITIONS PRECEDENT TO SHAREHOLDER'S OBLIGATION TO
CLOSE
The Shareholder's and the Company's obligation to consummate the Merger
and to take the other actions required to be taken by the Shareholder and the
Company 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 the
Shareholder, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. All of TGI'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, without giving effect to any supplement to
the TGI Disclosure Letter.
7.2 TGI'S PERFORMANCE. All of the covenants and obligations that TGI 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
Company Disclosure Letter must have been obtained and must be in full force and
effect.
7.4 ADDITIONAL DOCUMENTS. TGI must have caused the following documents
to be delivered to the Shareholder:
20
<PAGE>
(a) an opinion of Womble Carlyle Sandridge & Rice, PLLC, dated
the Closing Date, in form acceptable to the Shareholder; and
(b) a certificate of the officers of TGI (i) evidencing the
accuracy of any representation or warranty of TGI; (ii) evidencing the
performance by TGI of, or the compliance by TGI with, any covenant or obligation
required to be performed or complied with by TGI; (iii) evidencing the
satisfaction of any condition referred to in this Section 7; and (iv) 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 TGI or the Shareholder or the Company,
or against any person affiliated with TGI or the Shareholder 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.
7.6 CONCURRENT CLOSING. The transactions contemplated by the Agreement
and Plan of Reorganization dated December 12, 1997, by and between TGI and Hawk
Enterprises, Inc. and the Agreement and Plan of Reorganization dated December
12, 1997, by and between TGI and T.W. Transport, Inc. shall have been
consummated on or before the Closing Date.
7.7 NO MATERIAL ADVERSE CHANGE. There shall not have been any material
adverse change in the business of TGI.
8. TERMINATION
8.1 TERMINATION EVENTS. This Agreement may, by notice given prior to or
at the Closing, be terminated:
(a) by either TGI or the Shareholder 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 TGI 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 TGI to comply with its
obligations under this Agreement) and TGI has not waived such condition on or
before the Closing Date; or (ii) by the Shareholder, 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 the
Shareholder to comply with their obligations under this Agreement) and the
Shareholder has not waived such condition on or before the Closing Date;
(c) by mutual consent of TGI and the Shareholder; or
21
<PAGE>
(d) by either TGI or the Shareholder 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 December 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
Company Disclosure Letter, the supplements to the Company Disclosure Letter, the
TGI Disclosure Letter, the supplements to the TGI Disclosure Letter and any
other certificate or document delivered pursuant to this Agreement will survive
the Closing. 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 at any time,
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 SHAREHOLDER. Subject to
the limitations set forth below, the Shareholder will indemnify and hold
harmless TGI, 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 (including incidental and consequential damages), expense
(including costs of investigation and defense and reasonable attorneys' fees) or
diminution of value, 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 the
Shareholder in this Agreement, the Company Disclosure Letter, the supplements to
the Company Disclosure Letter, or any other certificate or document delivered by
the Company or the Shareholder pursuant to this Agreement;
(b) any breach by the Company or the Shareholder of any
covenant or obligation of the Shareholder or the Company in this Agreement;
(c) any material liability not otherwise disclosed to TGI
herein or in the Company Disclosure Letter and any supplement thereto for
product shipped or manufactured by, or any services provided by, the Company
prior to the Closing Date;
22
<PAGE>
(d) the allegations set forth in Manson Avery, et al. v.
Denver S. Wade, et al., Civil Action No. 97-0054 filed in the Circuit Court of
Noxubee County, Mississippi (the "Mississippi Lawsuit") and such items as
disclosed in the Company Disclosure Letter which are identified by TGI within
five (5) days of the date hereof, as agreed upon by the Shareholder, provided
that if the parties do not so agree, TGI may withdrawn such item or terminate
this Agreement upon written notice to the Shareholder; or
(e) 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 the Shareholder or the Company
(or any person acting on their behalf) in connection with any of the
Contemplated Transactions.
Notwithstanding anything to the contrary in this Agreement,
the Shareholder's liability hereunder to TGI and to Indemnified Persons shall
not exceed the value of the Escrow Shares (as defined below), as determined from
time to time at the time a claim is made hereunder.
9.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY TGI. TGI will indemnify
and hold harmless the Shareholder, and will pay to the Shareholder the amount of
any Damages arising, directly or indirectly, from or in connection with (a) any
breach of any representation or warranty made by TGI in this Agreement, the TGI
Disclosure Letter, any supplement to the TGI Disclosure Letter, any Schedule to
this Agreement or in any certificate or document delivered by TGI pursuant to
this Agreement, (b) any breach by TGI of any covenant or obligation of TGI in
this Agreement, or (c) 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 TGI (or any person acting on its
behalf) in connection with any of the Contemplated Transactions.
9.4 TIME LIMITATIONS. If the Closing occurs, the Shareholder 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, 3.18
and 3.19, unless on or before the third (3rd) anniversary of the Closing Date
TGI notifies the Shareholder of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by TGI. A claim with respect
to Sections 3.3, 3.10, 3.12, 3.18 or 3.19, or a claim for indemnification or
reimbursement not based upon any representation or warranty or any covenant or
obligation to be performed and complied with prior to the Closing Date, may be
made at any time. If the Closing occurs, TGI will have no liability (for
indemnification or otherwise) with respect to any representation or warranty
other than those in Section 4.6, unless on or before the third (3rd) anniversary
of the Closing Date, the Shareholder notifies TGI of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by the
Shareholder. A claim with respect to Section 4.6, or a claim for indemnification
or reimbursement not based upon any representation or warranty or any covenant
or obligation to be performed and complied with prior to the Closing Date, may
be made at any time.
23
<PAGE>
9.5 ESCROW. At the Closing, the Shareholder will deposit all of the
shares of TGI Common Stock that are issued to the Shareholder pursuant to
Section 2.1 hereof (the "Escrow Shares") with a bank or trust company located
within the State of Georgia which will act as an escrow agent (the "Escrow
Agent"), who will hold the Escrow Shares in escrow as collateral for the
indemnification obligations of the Shareholder under this Agreement, the payment
in full of the Shareholder's Promissory Note and the obligations of the
Shareholder under the Guarantee. On the second (2nd) anniversary of the Closing
Date, the Escrow Shares (or such portion as then remaining in escrow) will be
released to the Shareholder as provided in the Escrow Agreement; provided that
in the event that prior to the second (2nd) anniversary of the Closing Date, the
litigation Mississippi Lawsuit is dismissed with prejudice or settled with no
liability against the Company and Rainbow Group, Inc., then eighty percent (80%)
of the Escrow Shares will be released to the Shareholder upon proof of the
dismissal or settlement satisfactory to TGI, all as provided in the Escrow
Agreement. In addition, after the first anniversary of the Closing Date, the
Shareholder shall have the right to direct the Escrow Agent to sell the Escrow
Shares; provided that (i) the resulting sales proceeds equal at least $6.625 per
share; and (ii) eighty percent (80%) of the proceeds from any such sale shall
continue to be held by the Escrow Agent as collateral for the Shareholder's
obligations hereunder, in replacement of the Escrow Shares. The Escrow Shares
will serve as security for the Shareholder's indemnity obligations as set forth
in the Escrow Agreement.
9.6 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person (which
term shall include the Shareholder for purposes of this Section 9.6) 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 9.6(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
24
<PAGE>
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 (which may not be unreasonably withheld). If notice is given to an
indemnifying party of the commencement of any proceeding and the indemnifying
party does not, within ten (10) days after such notice is given, give written
notice to the Indemnified Person of its election to assume the defense of such
proceeding or specifically deny all liability and responsibility therefore,
including the basis for such denial, the indemnifying party will be bound by any
determination made in such proceeding or any compromise or settlement effected
by the Indemnified Person, reasonably and in good faith. In the event that the
Shareholder denies liability hereunder as provided above, and the parties are
required to litigate or arbitrate such denial, the prevailing party in such
action shall also be entitled to recover its attorneys' fees and cost of
collection or defense, as appropriate.
(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).
9.7 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.
9.8 REMEDY. The sole and exclusive remedy of TGI against the
Shareholder for any liability arising under this Agreement or the Shareholder's
Closing Documents (except for the Employment Agreement, the Non-Competition
Agreement, Escrow Agreement and Subscription Agreement) is the indemnification
contained in Section 9.2 hereinabove. TGI acknowledges that the dollar amount of
any claim made under the Escrow Agreement is subject to the limitations
contained in Section 9.2 hereof.
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, provided that if
the Shareholder is required to travel to Atlanta for the Closing, all
25
<PAGE>
expenses of the Shareholder and its counsel, including reasonable attorneys'
fees, will be paid by the Company.
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 the parties hereto shall mutually agree,
provided that TGI shall be entitled to make such announcements with respect
hereto as may be required by securities laws or regulations, provided that TGI
will provide Shareholder with a copy of the first announcement regarding this
transaction in advance of the release thereof. Unless consented to by TGI in
advance or required by applicable law, prior to the Closing the Shareholder
shall, and shall cause the Company to, keep this Agreement strictly confidential
and may not make any disclosure of this Agreement to any person. The Shareholder
and TGI 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 TGI will have the right
to be present for any such communication.
10.3 CONFIDENTIALITY. Between the date of this Agreement and the
Closing Date, TGI and the Shareholder will maintain in confidence, and will
cause the directors, officers, employees, agents, and advisors of TGI and the
Company to maintain in confidence, any information received from the other
party, or from anyone on behalf of the other 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. The parties acknowledge that they have previously executed a
Confidentiality Agreement and agree that all documents received by them from any
other party prior to the date hereof shall be and remain subject to such prior
Confidentiality Agreement.
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)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, 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 and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
26
<PAGE>
Shareholder: Ms. Ellena A. Hawkins
2425 Ralph Avenue
Post Office Box 16250
Louisville, Kentucky 40256
with a copy to: Gary L. Stage, Esq.
Stoll, Keenon & Park, LLP
Suite 1000
201 East Main Street
Lexington, Kentucky 40507
TGI: Transit Group, Inc.
Overlook III
2859 Paces Ferry Road
Suite 1740
Atlanta, Georgia 30339
Attention: Philip A. Belyew, President
Facsimile No.: (770) 444-0246
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 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of Georgia, County of Cobb, or, if it has or can acquire jurisdiction, in the
United States District Court for the Northern District of Georgia, and each of
the parties consents to the non-exclusive jurisdiction of such courts (and of
the appropriate appellate courts) in any such action or proceeding and waives
any objection to venue laid therein.
10.6 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.
10.7 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.
27
<PAGE>
10.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter 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.
10.9 COMPANY DISCLOSURE LETTER. The disclosures in the Company
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 Company Disclosure Letter (other than an
exception expressly set forth as such in the Company Disclosure Letter with
respect to a specifically identified representation or warranty), the statements
in the body of this Agreement will control.
10.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither party
may assign any of its rights under this Agreement without the prior 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.
10.11 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.
10.12 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.
10.13 TIME OF ESSENCE. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
10.14 GOVERNING LAW. This Agreement will be governed by the laws of the
State of Kentucky (other than the Merger, which shall be governed by Indiana
law) without regard to conflicts of laws principles.
28
<PAGE>
10.15 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.
TGI:
TRANSIT GROUP, INC.
BY: /s/ Philip A. Belyew
PHILIP A. BELYEW, President
THE SHAREHOLDER:
/s/ Ellena A. Hawkins
ELLENA A. HAWKINS
THE "COMPANY":
RAINBOW TRUCKING SERVICES, INC.
BY: /s/ Ellena A. Hawkins
ELLENA A. HAWKINS, President
29
<PAGE>
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF REORGANIZATION
This First Amendment to Agreement and Plan of Reorganization
("Agreement") is made and entered into by and between Ellena A. Hawkins, a
Florida resident (the "Shareholder"), Rainbow Trucking Services, Inc., an
Indiana corporation (the "Company"), and Transit Group,Inc., a Florida
corporaiton ("TGI"), as of the 30th day of December, 1997.
RECITALS
A. The parties hereto are parties to that certain Agreement and Plan of
Reorganization dated as of December 12, 1997 (the "Reorganization Agreement").
B. The parties hereto desire to amend the Reorganization Agreement as provided
herein.
NOW THEREFORE, 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 hereto do hereby agree
as follows:
1. Amendment to Agreement. Reorganization Agreement is hereby
-----------------------
amended as follows:
1.1 Section 3.26 is hereby deleted in its entirety and is
replaced with the following:
"3.26 ACQUISITION OF ASSETS OF RAINBOW GROUP.On December 12,
1997, the Company purchased certain of the assets of Rainbow
Group, Inc., a Kentucky corporation owned by Robert L.
Hawkins, husband of the Shareholder ("Rainbow Group") which
are set forth on Part 3.26 of the Supplemental Company
Disclosure Letter (the "Rainbow Assets"). The Rainbow Assets
were purchased by the Company for good and valuable
consideration, and are owned by the Company free and clear of
any and all liens, claims or encumbrances whatsoever."
1.2 Section 5.6 is hereby deleted in its entirety and is
replaced with the following:
"5.6 INTENTIONALLY OMITTED"
2. Continued Effect of Agreement. Except as specifically set
forth herein, the Reorganization Agreement remains in full
force and effect as of the date hereof. This Agreement shall
be governed by and construed in accordance with the laws of
the state of Kentucky and may not be amended or modified
other than in writing signed by all parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
TGI:
TRANSIT GROUP, INC.
BY: /s/ Philip A. Belyew
PHILIP A. BELYEW, President
THE SHAREHOLDER:
/s/ Ellena A. Hawkins
ELLENA A. HAWKINS
THE "COMPANY":
RAINBOW TRUCKING SERVICES, INC.
BY: /s/ Ellena A. Hawkins
ELLENA A. HAWKINS, President
EXHIBIT 2.2
AGREEMENT AND PLAN OF REORGANIZATION
[Stock for Stock - Reverse Triangular Merger]
BETWEEN
Transit Group, Inc., a Florida corporation,
Hawks Enterprises, Inc., a Kentucky corporation,
and Robert L. Hawkins, an individual resident of Florida
DATED: December 12, 1997
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS.......................................................1
2. PLAN OF REORGANIZATION............................................3
2.1 THE MERGER...............................................3
2.2 FRACTIONAL SHARES........................................4
2.3 EFFECTS OF THE MERGER....................................4
2.4 TAX-FREE REORGANIZATION..................................4
2.5 PURCHASE ACCOUNTING TREATMENT............................4
2.6 WAIVER OF DISSENTERS RIGHTS..............................5
2.7 CLOSING..................................................5
2.8 CLOSING OBLIGATIONS......................................5
3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER.....................6
3.1 ORGANIZATION AND GOOD STANDING...........................6
3.2 AUTHORITY; NO CONFLICT...................................6
3.3 CAPITALIZATION...........................................7
3.4 FINANCIAL STATEMENTS.....................................7
3.5 BOOKS AND RECORDS........................................8
3.6 TITLE TO PROPERTIES; ENCUMBRANCES........................8
3.7 CONDITION AND SUFFICIENCY OF ASSETS......................8
3.8 ACCOUNTS RECEIVABLE......................................8
3.9 NO UNDISCLOSED LIABILITIES...............................9
3.10 TAXES....................................................9
3.11 NO MATERIAL ADVERSE CHANGE...............................9
3.12 EMPLOYEE BENEFITS........................................9
3.13 COMPLIANCE..............................................10
3.14 LITIGATION..............................................10
3.15 ABSENCE OF CHANGES......................................11
3.16 CONTRACTS; NO DEFAULTS..................................12
3.17 INSURANCE...............................................12
3.18 ENVIRONMENTAL MATTERS...................................13
3.19 EMPLOYEES; INDEPENDENT CONTRACTORS......................14
3.20 LABOR RELATIONS; COMPLIANCE.............................14
3.21 INTELLECTUAL PROPERTY...................................14
3.22 RELATIONSHIPS WITH RELATED PERSONS......................15
3.23 BROKERS OR FINDERS......................................15
3.24 DISCLOSURE..............................................15
3.25 SUBSIDIARIES............................................16
4. REPRESENTATIONS AND WARRANTIES OF TGI............................16
i
<PAGE>
4.1 ORGANIZATION AND GOOD STANDING..........................16
4.2 AUTHORITY; NO CONFLICT..................................16
4.3 CERTAIN PROCEEDINGS.....................................16
4.4 BROKERS OR FINDERS......................................17
4.5 SEC FILINGS.............................................17
4.6 TGI STOCK...............................................17
4.7 DISCLOSURE..............................................17
5. COVENANTS OF SHAREHOLDER AND TGI.................................17
5.1 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS..............17
5.2 LOAN TO SHAREHOLDER.....................................17
5.3 SEC REPORTING...........................................17
5.4 DUE DILIGENCE...........................................18
5.5 RELEASE OF GUARANTORS...................................18
6. CONDITIONS PRECEDENT TO TGI'S OBLIGATION TO CLOSE................18
6.1 ACCURACY OF REPRESENTATIONS.............................18
6.2 SHAREHOLDER'S PERFORMANCE...............................18
6.3 CONSENTS................................................18
6.4 ADDITIONAL DOCUMENTS....................................18
6.5 NO PROCEEDINGS..........................................19
6.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS.....19
6.7 DUE DILIGENCE...........................................19
6.8 CONCURRENT CLOSING......................................19
6.9 BOARD APPROVAL..........................................19
7. CONDITIONS PRECEDENT TO SHAREHOLDER'S OBLIGATION TO CLOSE........19
7.1 ACCURACY OF REPRESENTATIONS.............................19
7.2 TGI'S PERFORMANCE.......................................20
7.3 CONSENTS................................................20
7.4 ADDITIONAL DOCUMENTS....................................20
7.5 NO PROCEEDINGS..........................................20
7.6 CONCURRENT CLOSING......................................20
7.7 NO MATERIAL ADVERSE CHANGE..............................20
8. TERMINATION......................................................20
8.1 TERMINATION EVENTS......................................20
8.2 EFFECT OF TERMINATION...................................21
9. INDEMNIFICATION; REMEDIES........................................21
9.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY
KNOWLEDGE...............................................21
ii
<PAGE>
9.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SHAREHOLDER
.......................................................21
9.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY TGI...........22
9.4 TIME LIMITATIONS........................................22
9.5 ESCROW..................................................23
9.6 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.......23
9.7 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS.............24
9.8 REMEDY..................................................25
10. GENERAL PROVISIONS...............................................25
10.1 EXPENSES................................................25
10.2 PUBLIC ANNOUNCEMENTS....................................25
10.3 CONFIDENTIALITY.........................................25
10.4 NOTICES.................................................26
10.5 JURISDICTION; SERVICE OF PROCESS........................26
10.6 FURTHER ASSURANCES......................................27
10.7 WAIVER..................................................27
10.8 ENTIRE AGREEMENT AND MODIFICATION.......................27
10.9 COMPANY DISCLOSURE LETTER...............................27
10.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS......27
10.11 SEVERABILITY............................................27
10.12 SECTION HEADINGS, CONSTRUCTION..........................27
10.13 TIME OF ESSENCE.........................................28
10.14 GOVERNING LAW...........................................28
10.15 COUNTERPARTS............................................28
iii
<PAGE>
Agreement and Plan of Reorganization
This Agreement and Plan of Reorganization ("Agreement") is made as of
December 12, 1997, by Transit Group, Inc., a Florida corporation ("TGI"), Hawks
Enterprises, Inc., a Kentucky corporation (the "Company"), and Robert L.
Hawkins, an individual resident of Florida.
RECITALS
A. The parties intend that, subject to the terms and conditions set
forth herein, a new corporation that will be organized under Kentucky law as a
wholly owned subsidiary of TGI ("Newco") will merge with and into the Company in
a reverse triangular merger (the "Merger"), with the Company to be the surviving
corporation of the Merger, all pursuant to the terms and conditions of this
Agreement, the Articles of Merger substantially in the form of Exhibit A hereto
(the "Articles of Merger") and the applicable provisions of the laws of
Kentucky.
B. Upon the effectiveness of the Merger, all the outstanding capital
stock of the Company will be converted into capital stock of TGI, in the manner
and on the basis determined herein and as provided in the Articles of Merger.
C. The Merger is intended to be treated as a "purchase" for accounting
purposes and a tax-free reorganization pursuant to the provisions of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"), by
virtue of the provisions of Section 368(a)(2)(D) of the Code.
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 Agreement and Plan of Reorganization together with
all Schedules and Exhibits hereto.
"Balance Sheet"--as defined in Section 3.4.
"Closing"--as defined in Section 2.7.
"Closing Date"--the date and time as of which the Closing actually takes
place.
1
<PAGE>
"Company"--collectively the Company identified in the Recitals to this
Agreement together with each subsidiary of same.
"Company Disclosure Letter"--the disclosure letter delivered by the
Shareholder to TGI concurrently with the execution and delivery of this
Agreement.
"Contemplated Transactions"--all of the transactions contemplated by this
Agreement, including:
(a) the merger of Newco and the Company;
(b) the execution, delivery, and performance of the Employment
Agreement, Noncompetition Agreement, Subscription Agreement and the Escrow
Agreement;
(c) the loan by TGI to the Shareholder; and
(d) the performance by TGI, the Company and the Shareholder of
their respective covenants and obligations under this Agreement.
"Damages"--as defined in Section 9.2.
"Effective Time" --the effective time of the Merger as defined in
Section 2.1.
"Employment Agreement" --as defined in Section 2.8(a)(v).
"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
2
<PAGE>
(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.
"Escrow Agreement" --as defined in Section 2.8(a)(iv).
"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.
"Merger"--as defined in the Recitals hereto.
"Noncompetition Agreement"--as defined in Section 2.8(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, 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.
"TGI"--as defined in the first paragraph of this Agreement.
2. PLAN OF REORGANIZATION.
2.1 THE MERGER. Subject to the terms and conditions of this Agreement,
prior to the Closing Date, TGI will incorporate and organize Newco and will
cause the Board of Directors and shareholders of Newco to approve the Merger and
perform all of the duties of Newco set forth in this Agreement. Subject to the
terms and conditions of this Agreement, the Articles of Merger will be filed
with the Secretary of State of the State of Kentucky on the Closing Date. The
date and time that the Articles of Merger is filed with the Kentucky Secretary
of State and the Merger thereby becomes effective will be referred to in this
Agreement as the "Effective Time." Subject to the terms and conditions of this
Agreement and the Articles of Merger, Newco will be merged with and into the
Company in a statutory merger pursuant to the Articles of Merger and in
accordance with applicable provisions of Kentucky law as follows:
(a) Conversion of Company Common Stock. The shares of common
stock of the Company, no par value (the "Company Common Stock"), that are
issued and outstanding
3
<PAGE>
immediately prior to the Effective Time, will, by virtue of the Merger and at
the Effective Time and without further action on the part of any holder thereof,
be converted into that number of shares of fully paid and nonassessable common
stock of TGI, $.01 par value per share ("TGI Common Stock"), determined by
dividing US One Million Two Hundred Fifty Thousand Dollars ($1,250,000) by
$6.625, for a total of 188,679 shares of TGI Common Stock.
(b) Conversion of Newco Shares. Each share of Newco Common
Stock, par value $0.01 ("Newco Common Stock"), that is issued and outstanding
immediately prior to the Effective Time, will, by virtue of the Merger and
without further action on the part of the sole shareholder of Newco, be
converted into and become one share of common stock of the Company, as the
surviving corporation, that is to be issued and outstanding immediately after
the Effective Time, which shall be the only share of Company Common Stock that
is issued and outstanding immediately after the Effective Time.
2.2 FRACTIONAL SHARES. No fractional shares of TGI Common Stock will be
issued in connection with the Merger.
2.3 EFFECTS OF THE MERGER. At the Effective Time: (a) the separate
existence of Newco will cease and Newco will be merged with and into the Company
and the Company will be the surviving corporation pursuant to the terms of the
Articles of Merger; (b) the Articles of Incorporation and Bylaws of Newco will
be the Articles of Incorporation and Bylaws of the surviving corporation; (c)
each share of Newco Common Stock outstanding immediately prior to the Effective
Time will be converted as provided in Section 2.1(b) above; (d) the directors of
Newco in effect at the Effective Time will be the directors of the Company as
the surviving corporation, and the officers of Newco will be the officers of the
Company as the surviving corporation; (e) each share of Company Common Stock
outstanding immediately prior to the Effective Time will be converted as
provided in Section 2.1(a); and (f) the Merger will, at and after the Effective
Time, have all of the effects provided by applicable law.
2.4 TAX-FREE REORGANIZATION. The parties intend to adopt this Agreement
as a tax-free plan of reorganization and to consummate the Merger in accordance
with the provisions of Section 368(a)(1)(A) of the Code. The parties believe
that the value of the TGI Common Stock to be received in the Merger is equal to
the value of the Company Common Stock to be surrendered in exchange therefor.
The TGI Common Stock issued in the Merger will be issued solely in exchange for
the Company Common Stock, and no other transaction other than the Merger
represents, provides for or is intended to be an adjustment to, the
consideration paid for the Company Common Stock. TGI represents now, and as of
the Closing, that it presently intends to continue the Company's historic
business or use a significant portion of the Company's business assets in a
business. The Shareholder acknowledges that it has no present plan or intention
to sell, exchange or dispose of more than 50% of the shares of TGI Common Stock
received in the Merger. The provisions and representations contained or referred
to in this Section 2.4 shall survive until the expiration of the applicable
statute of limitations. The Shareholder acknowledges that he has received his
own independent tax advice and counsel with respect to the Merger and the
transactions
4
<PAGE>
contemplated herein and is not relying on representations made by TGI or its
counsel, accountants or advisors with respect to such tax matters.
2.5 PURCHASE ACCOUNTING TREATMENT. The Parties intend that the Merger
be treated as a "purchase" for accounting purposes.
2.6 WAIVER OF DISSENTERS RIGHTS. The Shareholder hereby waives any and
all rights he has to dissent from the Merger under Kentucky law.
2.7 CLOSING. The consummation of the purchase and sale provided for in
this Agreement (the "Closing") will take place at the offices of TGI's counsel,
Womble Carlyle Sandridge & Rice, PLLC, located at Suite 700, 1275 Peachtree
Street, N.E., Atlanta, Georgia 30309, at 10:00 a.m. (local time) on December 31,
1997, or at such time and place as the parties may agree.
2.8 CLOSING OBLIGATIONS. At the Closing:
(a) The Shareholder will deliver to TGI:
(i) certificates representing his shares of Company
Common Stock, duly endorsed for transfer to TGI (or
accompanied by duly executed stock powers);
(ii) releases and resignations from the officers and
directors of the Company duly executed by such parties;
(iii) a noncompetition agreement in the form of
Exhibit "B," executed by the Shareholder (the "Noncompetition
Agreement");
(iv) an escrow agreement in the form of Exhibit "C,"
executed by the Shareholder (the "Escrow Agreement");
(v) an employment agreement in the form of Exhibit
"D," executed by the Shareholder (the "Employment Agreement");
(vi) a subscription agreement for the shares of TGI
Common Stock to be issued in the Merger in the form of Exhibit
"E" (the "Subscription Agreement");
(vii) a promissory note in the amount of $200,000 in
the form of Exhibit "F," executed by the Shareholder,
guaranteed by Ellena A. Hawkins, and secured by a pledge of
the TGI Common Stock issued to the Shareholder in connection
herewith (the "Shareholder's Promissory Note") in
consideration of a loan by TGI to the Shareholder in the
amount of $200,000; and
5
<PAGE>
(viii) an unconditional guarantee (the "Guarantee")
of the $300,000 Promissory Note of Ellena A. Hawkins to TGI in
a form to be agreed upon.
(b) TGI will deliver to the Shareholder:
(i) a share certificate representing the TGI Common
Stock issued in the Merger in the name of the Shareholder;
(ii) the Employment Agreement; and
(iii) the face amount of the Shareholder's Promissory
Note in cash.
3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
The Shareholder represents and warrants to TGI as follows:
3.1 ORGANIZATION AND GOOD STANDING.
(a) Part 3.1 of the Company 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 Shareholder has delivered to TGI 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 Shareholder, enforceable against him in accordance with its
terms. Upon the execution and delivery by the Shareholder of the Escrow
Agreement, the Noncompetition Agreement, the Employment Agreement, the
Shareholder's Promissory Note, the Guarantee and the Subscription Agreement
(collectively, the "Shareholder's Closing Documents"), the Shareholder's Closing
Documents will constitute the legal, valid, and binding obligations of the
Shareholder, enforceable against him in accordance with their respective terms.
The Shareholder has the absolute and unrestricted right, power, authority, and
capacity to execute and deliver this Agreement and the Shareholder's Closing
6
<PAGE>
Documents and to perform his obligations under this Agreement and the
Shareholder's Closing Documents.
(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, 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 Company Disclosure
Letter, neither the Shareholder 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 one thousand (1,000) shares of common stock, no par value per share,
of which one hundred (100) shares are issued and outstanding and constitute the
"Shares." The Shareholder is and will be on the Closing Date the record and
beneficial owner and holder of the Shares, free and clear of all liens, claims
or encumbrances. With the exception of the Shares (which are owned by the
Shareholder), there are no other outstanding equity securities or other
securities of the Company. Other than standard legends with respect to
securities matters, 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 Shareholder has delivered to TGI: (a)
unaudited balance sheet of the Company as at December 31, 1996, and the
related unaudited statements of
7
<PAGE>
income, changes in stockholders' equity, and cash flow for the fiscal year then
ended, as set forth in the Company's tax return for such year, and (b) a balance
sheet of the Company as at September 30, 1997 (the "Balance Sheet") and an
income statement for the nine (9) month period then ended. 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, all in accordance with sound 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 TGI, are complete and correct in all material respects and have been
maintained in accordance with applicable law. The minute books of the Company
contain accurate and complete records of all meetings of, and corporate actions
taken by, the stockholders, the Boards of Directors, and committees of the
Boards of Directors of the Company, and no meeting of any such stockholders,
Board of Directors, or committee has been held for which minutes have not been
prepared and are not contained in such minute books.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES. 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, and acquired all such assets in
a bona fide transaction for fair value. All material properties and assets of
the Company are listed on Part 3.6(a) of the Company's Disclosure Letter and,
except as set forth on Part 3.6(b) of the Company Disclosure Letter, are free
and clear of all liens, claims or encumbrances and are not, to the best of the
Shareholder's knowledge, 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 identified 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 impair the present
or anticipated use of the property subject thereto. All buildings, plants, and
structures owned by the Company lie wholly within the boundaries of the real
property owned by the Company and do not encroach upon the property of, or
otherwise conflict with the property rights of, any other person.
3.7 CONDITION AND SUFFICIENCY OF ASSETS. Except as set forth on Part
3.7 of the Company Disclosure Letter, the buildings, plants, structures, and
equipment owned or leased by the Company are, to the best of the Shareholder's
knowledge, structurally sound, are not in need of extraordinary 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 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
8
<PAGE>
of the Company's businesses after the Closing if conducted 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, except as set forth on Part 3.8
of the Company Disclosure Letter, the accounts receivable are or will be as of
the Closing Date current and collectible net of the respective reserves shown on
the Balance Sheet. There is no contest, claim, or right of set-off relating to
the amount or validity of such accounts receivable.
3.9 NO UNDISCLOSED LIABILITIES. The Company has no material liabilities
or obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent, or otherwise) except for liabilities or obligations (i)
reflected or reserved against in the Balance Sheet; (ii) current liabilities not
in excess of $25,000, individually or in the aggregate, incurred in the ordinary
course of business since the date thereof; or (iii) specifically disclosed
herein or in Part 3.9 of the Company Disclosure Letter.
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) Except as set forth on Part 3.10 of the Company Disclosure
Letter, no United States, federal or state income tax returns of the Company
have been audited by the IRS or relevant state tax authorities. Neither the
Shareholder 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) The Shareholder has delivered to TGI true and accurate
copies of all federal and state tax returns for the Company for each of the
three years ended December 31, 1994, 1995 and 1996. 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.
9
<PAGE>
3.11 NO MATERIAL ADVERSE CHANGE. Except as set forth on Part 3.11 of
the Company Disclosure Letter, 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 the Shareholder knows of no
event which has occurred or circumstance which exists that may result in such a
material adverse change.
3.12 EMPLOYEE BENEFITS. Part 3.12 of the Company 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. Plans as defined hereunder shall not include such plans
maintained by Laxus Group, from whom the Company leases certain of its
employees, and with respect to which the Company has no liability. 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 substantial compliance with all
applicable laws.
(b) Part 3.13 of the Company 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.
10
<PAGE>
3.14 LITIGATION.
(a) Except as set forth in Part 3.14 of the Company Disclosure
Letter, there is no pending or to the knowledge of the Shareholder, 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 Shareholder or, to the knowledge of the Shareholder, 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. 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 payments and increases 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 at least $25,000;
11
<PAGE>
(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 Company Disclosure Letter contains a
complete and accurate list (except the items referenced in Section 3.16(a)(i)
below need not be included in such list), and the Shareholder has delivered to
TGI 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 $25,000;
(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 Company 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 compliance with all material applicable terms and
requirements of each contract. To the best of the Shareholder's knowledge, each
third party to any contract with the Company is, and at all times has been, in
compliance with all material applicable terms and requirements of such contract.
The Company has not given nor received notice
12
<PAGE>
from any other person regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any contract, and no material default
or event of default has occurred thereunder.
3.17 INSURANCE.
(a) The Shareholder has delivered to TGI 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 two (2) years
preceding the date of this Agreement, and true and complete copies of all
pending applications for policies of insurance.
(b) Except as set forth on Part 3.17 of the Company Disclosure
Letter, all policies to which the Company is a party or that provide coverage to
either the Shareholder, the Company, or any director or officer of the Company
(i) are valid, outstanding, and enforceable; (ii) in the Shareholder's judgment,
are issued by an insurer that is financially sound and reputable; (iii) provide
adequate insurance coverage, in the Shareholder's judgment, for the assets and
the operations of the Company for all risks normally insured against in the
Company's industry; (iv) will not be terminated or subject to termination as a
result of the consummation of the Contemplated Transactions; and (v) except for
the amounts indicated on Part 3.17 of the Company Disclosure Letter, do not
provide for any retrospective premium adjustment or other experienced-based
liability on the part of the Company.
(c) Except as set forth on Part 3.17 of the Company's
Disclosure Letter, neither the Shareholder 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) Except as set forth on Part 3.18 of the Company Disclosure
Letter, the Company is, and at all times has been, in substantial compliance
with, and has not been and is not in violation of or liable under, any
Environmental Law. The Shareholder has no basis to expect, nor has the
Shareholder 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.
13
<PAGE>
(b) Except as set forth on Part 3.18 of the Company Disclosure
Letter, (i) there are no Hazardous Materials present on or at the facilities
owned or leased by the Company, except such Hazardous Materials as are commonly
used in the operation of a transportation business and which are maintained and
used by the Company in compliance with applicable law, or (ii) to the knowledge
of the Shareholder, 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.
(c) The Shareholder has delivered to TGI true and complete
copies and results of any reports, studies, analyses, tests, or monitoring
possessed or initiated by the Shareholder 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) To the knowledge of the Shareholder, no employee or
independent contractor 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.
(b) All persons rendering services to the Company have been
properly characterized and treated as either employees or independent
contractors, and the Company has not received notice of, nor does the
Shareholder 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, to the Shareholder's knowledge, 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 substantially complied in all respects with the 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.
14
<PAGE>
(b) The Company is, and at all times has been, in substantial
compliance with, and has not been and is not in violation of or liable under,
any Occupational Safety and Health Law. The Shareholder has no basis to expect,
nor has the Shareholder 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 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 set forth on Part
3.22 of the Disclosure Letter, no Shareholder or any related person or affiliate
of the Shareholder or of the Company has, or has had, any interest in any
property used in the Company's business. The Shareholder nor any related person
or affiliate of the Shareholder 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. The
Shareholder nor any related person or affiliate of the Shareholder or of the
Company is a party to any contract with the Company.
3.23 BROKERS OR FINDERS. Neither the Company, the Shareholder 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.
15
<PAGE>
3.24 DISCLOSURE. No representation or warranty of the Shareholder in
this Agreement and no statement in the Company 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 Shareholder that has specific application to the Shareholder or the
Company (other than general economic or industry conditions) and that materially
adversely affects or, as far as the Shareholder 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 Company Disclosure Letter.
3.25 SUBSIDIARIES. The Company has no subsidiaries.
4. REPRESENTATIONS AND WARRANTIES OF TGI
TGI has delivered to the Shareholder herewith TGI's Disclosure Letter.
TGI represents and warrants to the Shareholder as follows:
4.1 ORGANIZATION AND GOOD STANDING. TGI 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 TGI, enforceable against TGI in accordance with its terms. Upon
the execution and delivery by TGI of the Employment Agreement, the Employment
Agreement will constitute the legal, valid and binding obligation of TGI,
enforceable in accordance with its terms. TGI has the absolute and unrestricted
right, power, and authority to execute and deliver this Agreement and the
Employment Agreement and to perform its obligations hereunder and thereunder.
(b) Neither the execution and delivery of this Agreement by
TGI nor the consummation or performance of any of the Contemplated Transactions
by TGI will contravene, conflict with, result in a violation of or give any
person the right to prevent, delay, or otherwise interfere with any of the
Contemplated Transactions pursuant to:
(i) any provision of TGI's Articles of Incorporation or
Bylaws;
(ii) any resolution adopted by the board of directors
or the stockholders of TGI;
(iii) any legal requirement or order to which TGI may
be subject; or
(iv) any contract to which TGI is a party or by which
TGI may be bound.
16
<PAGE>
(c) TGI is not and will not 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.
4.3 CERTAIN PROCEEDINGS. There is no pending proceeding that has been
commenced against TGI and that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions.
4.4 BROKERS OR FINDERS. Except as set forth in Schedule 4.4, TGI 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.
4.5 SEC FILINGS. TGI has filed all reports required to be filed prior
to the date hereof under the Securities Exchange Act of 1934, as amended. All
such filings complied in all material respects with applicable law, and no such
filing contained a material misstatement or omission on the date of such filing.
Since their respective filing dates, no event has occurred of which TGI has
knowledge which would result in TGI's being required to amend any such reports.
4.6 TGI STOCK. Upon consummation of the Merger and fulfillment of the
conditions set forth herein, the shares of TGI Common Stock to be issued to the
Shareholder in connection with the Merger will be fully paid, duly authorized,
validly issued and non-assessable. The delivery by TGI of the TGI Common Stock
to the Shareholder will transfer and convey to the Shareholder valid title to
such TGI Common Stock, free and clear of all liens, pledges, encumbrances and
claims of any kind, except restrictions referred to in this Agreement and under
applicable securities laws. All voting rights of TGI are vested exclusively in
the TGI Common Stock.
4.7 DISCLOSURE. No representation or warranty of TGI in this Agreement
or in the TGI Disclosure Letter contains a material misstatement or omits a
material fact necessary to make the statements herein or therein not misleading.
5. COVENANTS OF SHAREHOLDER AND TGI
5.1 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. Except as expressly
provided in this Agreement, the Shareholder will cause all indebtedness owed to
the Company by the Shareholder or any related person of the Shareholder to be
paid in full prior to Closing.
5.2 LOAN TO SHAREHOLDER. TGI agrees to deliver to the Shareholder on
the Closing Date, in exchange for, and in accordance with the terms and
conditions of, the Shareholder's Promissory Note in the form of Exhibit "F",
which shall be secured by Shareholder's pledge of the Escrow Shares as provided
in Section 9.5 hereof, the sum of US Five Hundred Thousand Dollars ($500,000).
The Shareholder's Promissory Note shall be non-recourse to the extent that on
the maturity date of the Shareholder's Promissory Note, the per share closing
trade price of the TGI
17
<PAGE>
Common Stock, as defined in the Wall Street Journal, is less than Six and
625/1000 Dollars ($6.625) per share. The parties acknowledge that the loan
described herein is not intended to serve as additional merger consideration and
is intended to be repaid in cash in accordance with its terms.
5.3 SEC REPORTING. TGI agrees to file all reports required under the
Securities Exchange Act of 1934, as amended, and, at the expense of the
Shareholder to take such other steps as necessary to allow the Shareholder to
avail himself of the resale provisions of Rule 144.
5.4 DUE DILIGENCE. The Company agrees that TGI may, prior to the
Closing Date, through its representatives, make such investigation of the
properties, books and records of the Company and of its financial and legal
condition as TGI may deem necessary or advisable in order to familiarize itself
with the Company. TGI agrees that it shall conduct its investigation in such a
manner as to minimize disruption to the Company's business.
5.5 RELEASE OF GUARANTORS. TGI, the Company and the Shareholders will
work together in good faith to obtain the release prior to the Closing Date of
any personal guarantees provided by the Shareholder to a third party with
respect to any debt or obligation of the Company. In the event such release has
not been obtained prior to the Closing, TGI agrees to obtain such release
thereafter within thirty (30) days following the receipt of all necessary
information related thereto from the Shareholder. Until such time as all such
Shareholders guarantees have been fully released or the underlying obligations
fully satisfied, TGI will cause the Company to perform all obligations
thereunder and will fully indemnify the Shareholder against any loss, claim or
payment made with respect thereto.
6. CONDITIONS PRECEDENT TO TGI'S OBLIGATION TO CLOSE
TGI's obligation to consummate the Merger and to take the other actions
required to be taken by TGI 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 TGI, in whole or in part):
6.1 ACCURACY OF REPRESENTATIONS. All of the Shareholder'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, without giving effect to
any supplement to the Company Disclosure Letter. TGI acknowledges that the
Company Disclosure Letter may be updated as of the Closing Date, but such update
must be satisfactory to TGI in its sole discretion.
6.2 SHAREHOLDER'S PERFORMANCE. All of the covenants and obligations
that the Shareholder is 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
Company Disclosure Letter must have been obtained and must be in full force and
effect.
18
<PAGE>
6.4 ADDITIONAL DOCUMENTS. Each of the following documents must have
been delivered to TGI:
(a) an opinion of counsel to the Company and the Shareholder,
dated the Closing Date, in form acceptable to TGI; and
(b) a certificate of the Shareholder (i) evidencing the
accuracy of any of the Shareholder's representations and warranties; (ii)
evidencing the performance by the Shareholder of, or the compliance by the
Shareholder with, any covenant or obligation required to be performed or
complied with by the Shareholder; (iii) evidencing the satisfaction of any
condition referred to in this Section 6; and (iv) 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 TGI or the Shareholder or the Company,
or against any person affiliated with TGI or the Shareholder 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 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 Merger consideration provided for herein.
6.7 DUE DILIGENCE. TGI shall have completed its investigation of the
Company's assets, business and financial condition and shall, in its sole
discretion exercised in good faith, be satisfied with the results thereof.
6.8 CONCURRENT CLOSING. The transactions contemplated by the Agreement
and Plan of Reorganization dated December 12, 1997, by and between TGI and
Rainbow Trucking Services, Inc. and the Agreement and Plan of Reorganization
dated December 12, 1997, by and between TGI and T.W. Transport, Inc. shall have
been consummated on or before the Closing Date.
6.9 BOARD APPROVAL. The Board of Directors of TGI shall have approved
the Merger.
19
<PAGE>
7. CONDITIONS PRECEDENT TO SHAREHOLDER'S OBLIGATION TO CLOSE
The Shareholder's and the Company's obligation to consummate the Merger
and to take the other actions required to be taken by the Shareholder and the
Company 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 the
Shareholder, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. All of TGI'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, without giving effect to any supplement to
the TGI Disclosure Letter.
7.2 TGI'S PERFORMANCE. All of the covenants and obligations that TGI 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
Company Disclosure Letter must have been obtained and must be in full force and
effect.
7.4 ADDITIONAL DOCUMENTS. TGI must have caused the following
documents to be delivered to the Shareholder:
(a) an opinion of Womble Carlyle Sandridge & Rice, PLLC, dated
the Closing Date, in form acceptable to the Shareholder; and
(b) a certificate of the officers of TGI (i) evidencing the
accuracy of any representation or warranty of TGI; (ii) evidencing the
performance by TGI of, or the compliance by TGI with, any covenant or obligation
required to be performed or complied with by TGI; (iii) evidencing the
satisfaction of any condition referred to in this Section 7; and (iv) 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 TGI or the Shareholder or the Company,
or against any person affiliated with TGI or the Shareholder 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.
7.6 CONCURRENT CLOSING. The transactions contemplated by the Agreement
and Plan of Reorganization dated December 12, 1997, by and between TGI and
Rainbow Trucking Services, Inc. and the Agreement and Plan of Reorganization
dated December 12, 1997, by and between TGI and T.W. Transport, Inc. shall have
been consummated on or before the Closing Date.
20
<PAGE>
7.7 NO MATERIAL ADVERSE CHANGE. There shall not have been any material
adverse change in the business of TGI.
8. TERMINATION
8.1 TERMINATION EVENTS. This Agreement may, by notice given prior to or
at the Closing, be terminated:
(a) by either TGI or the Shareholder 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 TGI 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 TGI to comply with its
obligations under this Agreement) and TGI has not waived such condition on or
before the Closing Date; or (ii) by the Shareholder, 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 the
Shareholder to comply with their obligations under this Agreement) and the
Shareholder has not waived such condition on or before the Closing Date;
(c) by mutual consent of TGI and the Shareholder; or
(d) by either TGI or the Shareholder 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 December 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
Company Disclosure Letter, the supplements to the Company Disclosure Letter, the
TGI Disclosure Letter, the supplements to the TGI Disclosure Letter and any
other certificate or document delivered pursuant to this Agreement will survive
the Closing. 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 at any time,
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.
21
<PAGE>
9.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SHAREHOLDER. Subject to
the limitations set forth below, the Shareholder will indemnify and hold
harmless TGI, 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 (including incidental and consequential damages), expense
(including costs of investigation and defense and reasonable attorneys' fees) or
diminution of value, 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 the
Shareholder in this Agreement, the Company Disclosure Letter, the supplements to
the Company Disclosure Letter, or any other certificate or document delivered by
the Shareholder pursuant to this Agreement;
(b) any breach by the Shareholder of any covenant or
obligation of the Shareholder or the Company in this Agreement;
(c) any material liability not otherwise disclosed to TGI
herein or in the Company Disclosure Letter and any supplement thereto for
product shipped or manufactured by, or any services provided by, the Company
prior to the Closing Date;
(d) the allegations set forth in Manson Avery, et al. v.
Denver S. Wade, et al., Civil Action No. 97-0054 filed in the Circuit Court of
Noxubee County, Mississippi (the "Mississippi Lawsuit") and such items as
disclosed in the Company Disclosure Letter which are identified by TGI within
five (5) days of the date hereof, as agreed upon by the Shareholder, provided
that if the parties do not so agree, TGI may withdrawn such item or terminate
this Agreement upon written notice to the Shareholder; or
(e) 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 the Shareholder or the Company
(or any person acting on their behalf) in connection with any of the
Contemplated Transactions.
Notwithstanding anything to the contrary in this Agreement,
the Shareholder's liability hereunder to TGI and the Indemnified Persons shall
not exceed the value of the Escrow Shares, as determined from time to time, at
the time a claim is made hereunder.
9.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY TGI. TGI will indemnify
and hold harmless the Shareholder, and will pay to the Shareholder the amount of
any Damages arising, directly or indirectly, from or in connection with (a) any
breach of any representation or warranty made by TGI in this Agreement, the TGI
Disclosure Letter, any supplement to the TGI Disclosure Letter, any Schedule to
this Agreement or in any certificate or document delivered by TGI pursuant to
this Agreement, (b) any breach by TGI of any covenant or obligation of TGI in
this Agreement, or (c) any claim by any person for brokerage or finder's fees
22
<PAGE>
or commissions or similar payments based upon any agreement or understanding
alleged to have been made by such person with TGI (or any person acting on its
behalf) in connection with any of the Contemplated Transactions.
9.4 TIME LIMITATIONS. If the Closing occurs, the Shareholder 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, 3.18
and 3.19, unless on or before the third (3rd) anniversary of the Closing Date
TGI notifies the Shareholder of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by TGI. A claim with respect
to Sections 3.3, 3.10, 3.12, 3.18 or 3.19, or a claim for indemnification or
reimbursement not based upon any representation or warranty or any covenant or
obligation to be performed and complied with prior to the Closing Date, may be
made at any time. If the Closing occurs, TGI will have no liability (for
indemnification or otherwise) with respect to any representation or warranty
other than those in Section 4.6, unless on or before the third (3rd) anniversary
of the Closing Date, the Shareholder notifies TGI of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by the
Shareholder. A claim with respect to Section 4.6, or a claim for indemnification
or reimbursement not based upon any representation or warranty or any covenant
or obligation to be performed and complied with prior to the Closing Date, may
be made at any time.
9.5 ESCROW. At the Closing, the Shareholder will deposit all of the
shares of TGI Common Stock that are issued to the Shareholder pursuant to
Section 2.1 hereof (the "Escrow Shares") with a bank or trust company located
within the State of Georgia which will act as an escrow agent (the "Escrow
Agent"), who will hold the Escrow Shares in escrow as collateral for both the
indemnification obligations of the Shareholder under this Agreement, the payment
in full of the Shareholder's Promissory Note and the obligations of the
Shareholder under the Guarantee. On the second (2nd) anniversary of the Closing
Date, the Escrow Shares (or such portion as then remaining in escrow) will be
released to the Shareholder as provided in the Escrow Agreement; provided that
in the event that prior to the second (2nd) anniversary of the Closing Date, the
Mississippi Lawsuit is dismissed with prejudice or settled with no liability
against Rainbow Trucking Services, Inc. and Rainbow Group, Inc., then eighty
percent (80%) of the Escrow Shares will be released to the Shareholder upon
proof of the dismissal or settlement satisfactory to TGI, all as provided in the
Escrow Agreement. In addition, after the first anniversary of the Closing Date,
the Shareholder shall have the right to direct the Escrow Agent to sell the
Escrow Shares; provided that (i) the resulting sales proceeds equal at least
$6.625 per share; and (ii) eighty percent (80%) of the proceeds from any such
sale shall continue to be held by the Escrow Agent as collateral for the
Shareholder's obligations hereunder, in replacement of the Escrow Shares. The
Escrow Shares will serve as security for the Shareholder's indemnity obligations
as set forth in the Escrow Agreement.
9.6 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person (which
term shall include the Shareholder for purposes of this Section 9.6) 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
23
<PAGE>
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 9.6(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 (which may not be unreasonably withheld). If
notice is given to an indemnifying party of the commencement of any proceeding
and the indemnifying party does not, within ten (10) days after such notice is
given, give written notice to the Indemnified Person of its election to assume
the defense of such proceeding or specifically deny all liability and
responsibility therefor, including the basis for such denial, the indemnifying
party will be bound by any determination made in such proceeding or any
compromise or settlement effected by the Indemnified Person, reasonably and in
good faith. In the event that the Shareholder denies liability hereunder as
provided above, and the parties are required to litigate or arbitrate such
denial, the prevailing party in such action shall also be entitled to recover
its attorneys' fees and cost of collection or defense, as appropriate.
(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
24
<PAGE>
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).
9.7 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.
9.8 REMEDY. The sole and exclusive remedy of TGI against the
Shareholder for any liability arising under this Agreement or the Shareholder's
Closing Documents (except for the Employment Agreement, Non-Competetion
Agreement, Escrow Agreement and Subscription Agreement) is the indemnification
contained in Section 9.2 hereinabove. TGI acknowledges that the dollar amount of
any claim made under the Escrow Agreement is subject to the limitations
contained in Section 9.2 hereof.
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, provided that if
the Shareholder is required to travel to Atlanta for the Closing, all expenses
of the Shareholder and its counsel, including reasonable attorneys' fees, will
be paid by the Company.
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 the parties hereto shall mutually agree,
provided that TGI shall be entitled to make such announcements with respect
hereto as may be required by securities laws and regulations, provided that TGI
will provide Shareholder with a copy of the first announcement regarding this
transaction in advance of the release thereof. Unless consented to by TGI in
advance or required by applicable law, prior to the Closing the Shareholder
shall, and shall cause the Company to, keep this Agreement strictly confidential
and may not make any disclosure of this Agreement to any person. The Shareholder
and TGI 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 TGI will have the right
to be present for any such communication.
10.3 CONFIDENTIALITY. Between the date of this Agreement and the
Closing Date, TGI and the Shareholder will maintain in confidence, and will
cause the directors, officers, employees, agents, and advisors of TGI and the
Company to maintain in confidence, any written information received from the
other party, or from anyone on behalf of the other 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
25
<PAGE>
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. The parties acknowledge that they have
previously executed a Confidentiality Agreement and agree that all documents
received by them from any other party prior to the date hereof shall be and
remain subject to such prior Confidentiality Agreement.
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)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, 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 and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Shareholder: Mr. Robert L. Hawkins
5612 Tall Oaks Court
Louisville, Kentucky 40214
with a copy to: Gary L. Stage, Esq.
Stoll, Keenon & Park, LLP
Suite 1000
201 East Main Street
Lexington, Kentucky 40507
TGI: Transit Group, Inc.
Overlook III
2859 Paces Ferry Road
Suite 1740
Atlanta, Georgia 30339
Attention: Philip A. Belyew, President
Facsimile No.: (770) 444-0246
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 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of Georgia, County of Cobb, or, if it has or can
26
<PAGE>
acquire jurisdiction, in the United States District Court for the Northern
District of Georgia, and each of the parties consents to the non-exclusive
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
10.6 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.
10.7 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.
10.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter 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.
10.9 COMPANY DISCLOSURE LETTER. The disclosures in the Company
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 Company Disclosure Letter (other than an
exception expressly set forth as such in the Company Disclosure Letter with
respect to a specifically identified representation or warranty), the statements
in the body of this Agreement will control.
10.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither party
may assign any of its rights under this Agreement without the prior 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.
10.11 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.
27
<PAGE>
10.12 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.
10.13 TIME OF ESSENCE. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
10.14 GOVERNING LAW. This Agreement will be governed by the laws of the
State of Kentucky without regard to conflicts of laws principles.
10.15 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.
TGI:
TRANSIT GROUP, INC.
BY: /s/ Philip A. Belyew
PHILIP A. BELYEW, President
THE SHAREHOLDER:
/s/ Robert L. Hawkins
ROBERT L. HAWKINS
THE "COMPANY":
HAWKS ENTERPRISES, INC.
BY: /s/ Robert L. Hawkins
ROBERT L. HAWKINS, President
28
EXHIBIT 2.3
AGREEMENT AND PLAN OF REORGANIZATION
[Stock for Stock - Reverse Triangular Merger]
BETWEEN
Transit Group, Inc., a Florida corporation,
T.W. Transport, Inc., a Kentucky corporation,
and Timothy M. Weller, an individual resident of Kentucky
DATED: December 12, 1997
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS.......................................................1
2. PLAN OF REORGANIZATION............................................3
----------------------
2.1 THE MERGER...............................................3
2.2 FRACTIONAL SHARES........................................4
2.3 EFFECTS OF THE MERGER....................................4
2.4 TAX-FREE REORGANIZATION..................................4
2.5 PURCHASE ACCOUNTING TREATMENT............................5
2.6 WAIVER OF DISSENTERS RIGHTS..............................5
2.7 CLOSING..................................................5
2.8 CLOSING OBLIGATIONS......................................5
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER.................6
-------------------------------------------------
3.1 ORGANIZATION AND GOOD STANDING...........................6
3.2 AUTHORITY; NO CONFLICT...................................6
3.3 CAPITALIZATION...........................................7
3.4 FINANCIAL STATEMENTS.....................................7
3.5 BOOKS AND RECORDS........................................8
3.6 TITLE TO PROPERTIES; ENCUMBRANCES........................8
3*7 CONDITION AND SUFFICIENCY OF ASSETS......................8
3.8 ACCOUNTS RECEIVABLE......................................8
3.9 NO UNDISCLOSED LIABILITIES...............................9
3.10 TAXES....................................................9
3.11 NO MATERIAL ADVERSE CHANGE...............................9
3.12 EMPLOYEE BENEFITS........................................9
3.13 COMPLIANCE..............................................10
3.14 LITIGATION..............................................10
3.15 ABSENCE OF CHANGES......................................11
3.16 CONTRACTS; NO DEFAULTS..................................11
3.17 INSURANCE...............................................12
3.18 ENVIRONMENTAL MATTERS...................................13
3.19 EMPLOYEES; INDEPENDENT CONTRACTORS......................13
3.20 LABOR RELATIONS; COMPLIANCE.............................14
3.21 INTELLECTUAL PROPERTY...................................14
3.22 RELATIONSHIPS WITH RELATED PERSONS......................15
3.23 BROKERS OR FINDERS......................................15
3.24 DISCLOSURE..............................................15
3.25 SUBSIDIARIES............................................15
4. REPRESENTATIONS AND WARRANTIES OF TGI............................15
i
<PAGE>
4.1 ORGANIZATION AND GOOD STANDING..........................16
4.2 AUTHORITY; NO CONFLICT..................................16
4.3 CERTAIN PROCEEDINGS.....................................16
4.4 BROKERS OR FINDERS......................................16
4.5 SEC FILINGS.............................................16
4.6 TGI STOCK...............................................17
4.7 DISCLOSURE..............................................17
5. COVENANTS OF SHAREHOLDER AND TGI.................................17
--------------------------------
5.1 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS..............17
5.2 LOAN TO SHAREHOLDER.....................................17
5.3 SEC REPORTING...........................................17
5.4 DUE DILIGENCE...........................................17
5.5 RELEASE OF GUARANTORS...................................17
6. CONDITIONS PRECEDENT TO TGI'S OBLIGATION TO CLOSE................18
-------------------------------------------------
6.1 ACCURACY OF REPRESENTATIONS.............................18
6.2 SHAREHOLDER'S PERFORMANCE...............................18
6.3 CONSENTS................................................18
6.4 ADDITIONAL DOCUMENTS....................................18
6.5 NO PROCEEDINGS..........................................18
6.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS.....19
6.7 DUE DILIGENCE...........................................19
6.8 CONCURRENT CLOSING......................................19
6.9 BOARD APPROVAL..........................................19
7. CONDITIONS PRECEDENT TO SHAREHOLDER'S OBLIGATION TO CLOSE........19
---------------------------------------------------------
7.1 ACCURACY OF REPRESENTATIONS.............................19
7.2 TGI'S PERFORMANCE.......................................19
7.3 CONSENTS................................................19
7.4 ADDITIONAL DOCUMENTS....................................20
7.5 NO PROCEEDINGS.........................,................20
7.6 CONCURRENT CLOSING......................................20
7.7 NO MATERIAL ADVERSE CHANGE..............................20
8. TERMINATION......................................................20
8.1 TERMINATION EVENTS......................................20
8.2 EFFECT OF TERMINATION...................................21
9. INDEMNIFICATION; REMEDIES........................................21
9.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY
KNOWLEDGE...............................................21
ii
<PAGE>
9.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SHAREHOLDER
.......................................................21
9.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY TGI...........22
9.4 TIME LIMITATIONS........................................22
9.5 ESCROW..................................................22
9.6 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.......23
9.7 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS.............24
9.8 REMEDY..................................................24
10. GENERAL PROVISIONS...............................................24
------------------
10.1 EXPENSES................................................24
10.2 PUBLIC ANNOUNCEMENTS....................................24
10.3 CONFIDENTIALITY.........................................25
10.4 NOTICES.................................................25
10.5 JURISDICTION; SERVICE OF PROCESS........................26
10.6 FURTHER ASSURANCES......................................26
10.7 WAIVER..................................................26
10.8 ENTIRE AGREEMENT AND MODIFICATION.......................26
10.9 COMPANY DISCLOSURE LETTER...............................26
10.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS......27
10.11 SEVERABILITY............................................27
10.12 SECTION HEADINGS, CONSTRUCTION..........................27
10.13 TIME OF ESSENCE.........................................27
10.14 GOVERNING LAW...........................................27
10.15 COUNTERPARTS............................................27
iii
<PAGE>
Agreement and Plan of Reorganization
This Agreement and Plan of Reorganization ("Agreement") is made as of
December 12, 1997, by Transit Group, Inc., a Florida corporation ("TGI"), T.W.
Transport, Inc., a Kentucky corporation (the "Company"), and Timothy M. Weller,
an individual resident of Kentucky ("Shareholder").
RECITALS
A. The parties intend that, subject to the terms and conditions set
forth herein, a new corporation that will be organized under Kentucky law as a
wholly owned subsidiary of TGI ("Newco") will merge with and into the Company in
a reverse triangular merger (the "Merger"), with the Company to be the surviving
corporation of the Merger, all pursuant to the terms and conditions of this
Agreement, the Articles of Merger substantially in the form of Exhibit A hereto
(the "Articles of Merger") and the applicable provisions of the laws of
Kentucky.
B. Upon the effectiveness of the Merger, all the outstanding capital
stock of the Company will be converted into capital stock of TGI, in the manner
and on the basis determined herein and as provided in the Articles of Merger.
C. The Merger is intended to be treated as a "purchase" for accounting
purposes and a tax-free reorganization pursuant to the provisions of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"), by
virtue of the provisions of Section 368(a)(2)(D) of the Code.
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 Agreement and Plan of Reorganization together with
all Schedules and Exhibits hereto.
"Balance Sheet"--as defined in Section 3.4.
"Closing"--as defined in Section 2.7.
1
<PAGE>
"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.
"Company Disclosure Letter"--the disclosure letter delivered by the
Shareholder to TGI concurrently with the execution and delivery of this
Agreement.
"Contemplated Transactions"--all of the transactions contemplated by
this Agreement, including:
(a) the merger of Newco and the Company;
(b) the execution, delivery, and performance of the Employment
Agreement, Noncompetition Agreement, and the Subscription Agreement;
(c) the loan by TGI to the Shareholder; and
(d) the performance by TGI, the Company and the Shareholder of
their respective covenants and obligations under this Agreement.
"Damages"--as defined in Section 9.2.
"Effective Time" --the effective time of the Merger as defined in
Section 2.1.
"Employment Agreement" --as defined in Section 2.8(a)(iv).
"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
2
<PAGE>
(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.
"Escrow Agreement" -- as defined in Section 2.8(a)(vii).
"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.
"Merger"--as defined in the Recitals hereto.
"Noncompetition Agreement"--as defined in Section 2.8(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, 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.
"TGI"--as defined in the first paragraph of this Agreement.
2. PLAN OF REORGANIZATION.
2.1 THE MERGER. Subject to the terms and conditions of this Agreement,
prior to the Closing Date, TGI will incorporate and organize Newco and will
cause the Board of Directors and shareholders of Newco to approve the Merger and
perform all of the duties of Newco set forth in this Agreement. Subject to the
terms and conditions of this Agreement, the Articles of Merger will be filed
with the Secretary of State of the State of Kentucky on the Closing Date. The
date and time that the Articles of Merger is filed with the Kentucky Secretary
of State and the Merger thereby becomes effective will be referred to in this
Agreement as the "Effective Time." Subject to the terms and conditions of this
Agreement and the Articles of Merger, Newco will be merged with and into the
Company in a statutory merger pursuant to the Articles of Merger and in
accordance with applicable provisions of Kentucky law as follows:
(a) Conversion of Company Common Stock. The shares of common
stock of the Company, no par value (the "Company Common Stock"), that are issued
and outstanding immediately prior to the Effective Time, will, by virtue of the
Merger and at the Effective Time and without further action on the part of any
holder thereof, be converted into that number of shares of
3
<PAGE>
fully paid and nonassessable common stock of TGI, $.01 par value per share ("TGI
Common Stock"), determined by dividing US One Million Dollars ($1,000,000) by
$6.625, for a total of 150,943 shares of TGI Common Stock.
(b) Conversion of Newco Shares. Each share of Newco Common
Stock, par value $0.01 ("Newco Common Stock"), that is issued and outstanding
immediately prior to the Effective Time, will, by virtue of the Merger and
without further action on the part of the sole shareholder of Newco, be
converted into and become one share of common stock of the Company, as the
surviving corporation, that is to be issued and outstanding immediately after
the Effective Time, which shall be the only share of Company Common Stock that
is issued and outstanding immediately after the Effective Time.
2.2 FRACTIONAL SHARES. No fractional shares of TGI Common Stock will be
issued in connection with the Merger.
2.3 EFFECTS OF THE MERGER. At the Effective Time: (a) the separate
existence of Newco will cease and Newco will be merged with and into the Company
and the Company will be the surviving corporation pursuant to the terms of the
Articles of Merger; (b) the Articles of Incorporation and Bylaws of Newco will
be the Articles of Incorporation and Bylaws of the surviving corporation; (c)
each share of Newco Common Stock outstanding immediately prior to the Effective
Time will be converted as provided in Section 2.1(b) above; (d) the directors of
Newco in effect at the Effective Time will be the directors of the Company as
the surviving corporation, and the officers of Newco will be the officers of the
Company as the surviving corporation; (e) each share of Company Common Stock
outstanding immediately prior to the Effective Time will be converted as
provided in Section 2.1(a); and (f) the Merger will, at and after the Effective
Time, have all of the effects provided by applicable law.
2.4 TAX-FREE REORGANIZATION. The parties intend to adopt this Agreement
as a tax-free plan of reorganization and to consummate the Merger in accordance
with the provisions of Section 368(a)(1)(A) of the Code. The parties believe
that the value of the TGI Common Stock to be received in the Merger is equal to
the value of the Company Common Stock to be surrendered in exchange therefor.
The TGI Common Stock issued in the Merger will be issued solely in exchange for
the Company Common Stock, and no other transaction other than the Merger
represents, provides for or is intended to be an adjustment to, the
consideration paid for the Company Common Stock. TGI represents now, and as of
the Closing, that it presently intends to continue the Company's historic
business or use a significant portion of the Company's business assets in a
business. The Shareholder acknowledges that it has no present plan or intention
to sell, exchange or dispose of more than 50% of the shares of TGI Common Stock
received in the Merger. The provisions and representations contained or referred
to in this Section 2.4 shall survive until the expiration of the applicable
statute of limitations. The Shareholder acknowledges that he has received his
own independent tax advice and counsel with respect to the Merger and the
transactions contemplated herein and is not relying on representations made by
TGI or its counsel, accountants or advisors with respect to such tax matters.
4
<PAGE>
2.5 PURCHASE ACCOUNTING TREATMENT. The Parties intend that the Merger
be treated as a "purchase" for accounting purposes.
2.6 WAIVER OF DISSENTERS RIGHTS. The Shareholder hereby waives any and
all rights he has to dissent from the Merger under Kentucky law.
2.7 CLOSING. The consummation of the purchase and sale provided for in
this Agreement (the "Closing") will take place at the offices of TGI's counsel,
Womble Carlyle Sandridge & Rice, PLLC, located at Suite 700, 1275 Peachtree
Street, N.E., Atlanta, Georgia 30309, at 10:00 a.m. (local time) on December 31,
1997, or at such time and place as the parties may agree.
2.8 CLOSING OBLIGATIONS. At the Closing:
(a) The Shareholder will deliver to TGI:
(i) certificates representing his shares of Company
Common Stock, duly endorsed for transfer to TGI (or
accompanied by duly executed stock powers);
(ii) releases and resignations from the officers and
directors of the Company duly executed by such parties;
(iii) a noncompetition agreement in the form of
Exhibit "B," executed by the Shareholder (the "Noncompetition
Agreement");
(iv) an employment agreement in the form of Exhibit
"C," executed by the Shareholder (the "Employment Agreement");
(v) a subscription agreement for the shares of TGI
Common Stock to be issued in the Merger in the form of Exhibit
"D" (the "Subscription Agreement");
(vi) a promissory note in the amount of $175,000 in
the form of Exhibit "E" executed by the Shareholder and
secured by a pledge of the TGI Common Stock issued to the
Shareholder in connection herewith (the "Shareholder's
Promissory Note") in consideration of a loan by TGI to the
Shareholder in the amount of $175,000; and
(vii) an escrow agreement in the form of Exhibit "F,"
executed by the Shareholder (the "Escrow Agreement").
(b) TGI will deliver to the Shareholder:
(i) a share certificate representing the TGI Common
Stock issued in the Merger in the name of the Shareholder;
5
<PAGE>
(ii) the Employment Agreement; and
(iii) the face amount of the Shareholder's Promissory
Note in cash.
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
The Shareholder represents and warrants to TGI as follows:
3.1 ORGANIZATION AND GOOD STANDING.
(a) Part 3.1 of the Company 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 Shareholder has delivered to TGI 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 Shareholder, enforceable against him in accordance with its
terms. Upon the execution and delivery by the Shareholder of the Noncompetition
Agreement, the Employment Agreement, the Shareholder's Promissory Note and the
Subscription Agreement (collectively, the "Shareholder's Closing Documents"),
the Shareholder's Closing Documents will constitute the legal, valid, and
binding obligations of the Shareholder, enforceable against him in accordance
with their respective terms. The Shareholder has the absolute and unrestricted
right, power, authority, and capacity to execute and deliver this Agreement and
the Shareholder's Closing Documents and to perform his obligations under this
Agreement and the Shareholder's Closing Documents.
(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
6
<PAGE>
requirements of, 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 Company Disclosure
Letter, neither the Shareholder 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 two thousand (2,000) shares of common stock, no par value per share,
of which 2,000 shares are issued and outstanding and constitute the "Shares."
The Shareholder is and will be on the Closing Date the record and beneficial
owner and holder of the Shares, free and clear of all liens, claims or
encumbrances. With the exception of the Shares (which are owned by the
Shareholder), there are no other outstanding equity securities or other
securities of the Company. Other than standard legends with respect to
securities matters, 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 Shareholder has delivered to TGI: (a)
unaudited balance sheets of the Company as at December 31, 1995 and 1996, and
the related unaudited statements of income, changes in stockholders' equity, and
cash flow for the fiscal years then ended, and (b) a balance sheet of the
Company as at September 30, 1997 (the "Balance Sheet") and an income statement
for the nine (9) month period then ended. 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, all in accordance with sound accounting principles, consistently
applied throughout the periods involved. At Closing, the Company will have at
least the same amount of cash as reflected on the Balance Sheet.
7
<PAGE>
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 TGI, are complete and correct in all material respects and have been
maintained in accordance with applicable law. The minute books of the Company
contain accurate and complete records of all meetings of, and corporate actions
taken by, the stockholders, the Boards of Directors, and committees of the
Boards of Directors of the Company, and no meeting of any such stockholders,
Board of Directors, or committee has been held for which minutes have not been
prepared and are not contained in such minute books.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES. 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. All material properties and
assets of the Company are listed on Part 3.6(a) of the Company Disclosure Letter
and, except as set forth on Part 3.6(b) of the Company Disclosure Letter, are
free and clear of all liens, claims or encumbrances and are not, to the best of
the Shareholder's knowledge, 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 identified 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 impair the present
or anticipated use of the property subject thereto. All buildings, plants, and
structures owned by the Company lie wholly within the boundaries of the real
property owned by the Company and do not encroach upon the property of, or
otherwise conflict with the property rights of, any other person.
3.7 CONDITION AND SUFFICIENCY OF ASSETS. Except as set forth on Part
3.7 of the Company Disclosure Letter, the buildings, plants, structures, and
equipment owned or leased by the Company are, to the best of the Shareholder's
knowledge, structurally sound, are not in need of extraordinary 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 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 if conducted 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, except as set forth on Part 3.8
of the Company Disclosure Letter, the accounts receivable are or will be as of
the Closing Date current and collectible net of the respective reserves shown on
the Balance Sheet. There is no contest, claim, or right of set-off relating to
the amount or validity of such accounts receivable.
8
<PAGE>
3.9 NO UNDISCLOSED LIABILITIES. The Company has no material liabilities
or obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent, or otherwise) except for liabilities or obligations (i)
reflected or reserved against in the Balance Sheet; (ii) current liabilities not
in excess of $25,000, individually or in the aggregate, incurred in the ordinary
course of business since the date thereof; or (iii) specifically disclosed
herein or in Part 3.9 of the Company Disclosure Letter.
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) Except as set forth on Part 3.10 of the Company Disclosure
Letter, no United States, federal or state income tax returns of the Company
have been audited by the IRS or relevant state tax authorities. Neither the
Shareholder 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) The Shareholder has delivered to TGI true and accurate
copies of all federal and state tax returns for the Company for each of the
three years ended December 31, 1994, 1995 and 1996. 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. Except as set forth on Part 3.11 of
the Company Disclosure Letter, 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 the Shareholder knows of no
event which has occurred or circumstance which exists that may result in such a
material adverse change.
3.12 EMPLOYEE BENEFITS. Part 3.12 of the Company 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. Plans as defined hereunder shall not
9
<PAGE>
include such plans maintained by Laxus Group, from whom the Company leases
certain of its employees, and with respect to which the Company has no
liability. 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 substantial compliance with all
applicable laws.
(b) Part 3.13 of the Company 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 Company Disclosure
Letter, there is no pending or to the knowledge of the Shareholder, 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 Shareholder or, to the knowledge of the Shareholder, any director or officer
of the Company, or any of the assets owned or used by the Company, is subject.
10
<PAGE>
3.15 ABSENCE OF CHANGES. 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 payments and increases 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 at least $25,000 other than
the entry into contracts with customers for the provision of transportation
services by the Company in the ordinary course of business;
(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 Company Disclosure Letter contains a
complete and accurate list (except the items referenced in Section 3.16(a)(i)
below need not be included in such list), and the Shareholder has delivered to
TGI true and complete copies, of:
11
<PAGE>
(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 $25,000;
(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 Company 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 compliance with all material applicable terms and
requirements of each contract. To the best of the Shareholder's knowledge, each
third party to any contract with the Company is, and at all times has been, in
compliance with all material 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 material default or event of default has occurred
thereunder.
3.17 INSURANCE.
(a) The Shareholder has delivered to TGI 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 two (2) years
preceding the date of this Agreement, and true and complete copies of all
pending applications for policies of insurance.
(b) Except as set forth on Part 3.17 of the Company Disclosure
Letter, all policies to which the Company is a party or that provide coverage to
either the Shareholder, the Company, or any director or officer of the Company
(i) are valid, outstanding, and enforceable; (ii) in the Shareholder's judgment,
are issued by an insurer that is financially sound and reputable; (iii) provide
adequate insurance coverage, in the Shareholder's judgment, for the assets and
the operations of the Company for all risks normally insured against in the
Company's industry; (iv) will not be
12
<PAGE>
terminated or subject to termination as a result of the consummation of the
Contemplated Transactions; and (v) except for the amounts indicated on Part 3.17
of the Company Disclosure Letter, do not provide for any retrospective premium
adjustment or other experienced-based liability on the part of the Company.
(c) Except as set forth on Part 3.17 of the Company's
Disclosure Letter, neither the Shareholder 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) Except as set forth on Part 3.18 of the Company Disclosure
Letter, the Company is, and at all times has been, in substantial compliance
with, and has not been and is not in violation of or liable under, any
Environmental Law. The Shareholder has no basis to expect, nor has the
Shareholder 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 Company Disclosure
Letter (i) there are no Hazardous Materials present on or at the facilities
owned or leased by the Company, except such Hazardous Materials as are commonly
used in the operation of a transportation business and which are maintained and
used by the Company in compliance with applicable law; or (ii) to the knowledge
of the Shareholder, 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.
(c) The Shareholder has delivered to TGI true and complete
copies and results of any reports, studies, analyses, tests, or monitoring
possessed or initiated by the Shareholder 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) To the knowledge of the Shareholder, no employee or
independent contractor of the Company is a party to, or is otherwise bound by,
any agreement or arrangement, including any
13
<PAGE>
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.
(b) All persons rendering services to the Company have been
properly characterized and treated as either employees or independent
contractors, and the Company has not received notice of, nor does the
Shareholder 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, to the Shareholder's knowledge, 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 substantially complied in all respects with the 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.
(b) The Company is, and at all times has been, in substantial
compliance with, and has not been and is not in violation of or liable under,
any Occupational Safety and Health Law. The Shareholder has no basis to expect,
nor has the Shareholder 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");
14
<PAGE>
(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 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 set forth on Part
3.22 of the Disclosure Letter, no Shareholder or any related person or affiliate
of the Shareholder or of the Company has, or has had, any interest in any
property used in the Company's business. The Shareholder nor any related person
or affiliate of the Shareholder 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. The
Shareholder nor any related person or affiliate of the Shareholder or of the
Company is a party to any contract with the Company.
3.23 BROKERS OR FINDERS. Neither the Company, the Shareholder 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.
3.24 DISCLOSURE. No representation or warranty of the Shareholder in
this Agreement and no statement in the Company 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 Shareholder that has specific application to the Shareholder or the
Company (other than general economic or industry conditions) and that materially
adversely affects or, as far as the Shareholder 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 Company Disclosure Letter.
3.25 SUBSIDIARIES. The Company has no subsidiaries.
4. REPRESENTATIONS AND WARRANTIES OF TGI
TGI has delivered to the Shareholder herewith TGI's Disclosure Letter.
TGI represents and warrants to the Shareholder as follows:
15
<PAGE>
4.1 ORGANIZATION AND GOOD STANDING. TGI 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 TGI, enforceable against TGI in accordance with its terms. Upon
the execution and delivery by TGI of the Employment Agreement, the Employment
Agreement will constitute the legal, valid and binding obligation of TGI,
enforceable in accordance with its terms. TGI has the absolute and unrestricted
right, power, and authority to execute and deliver this Agreement and the
Employment Agreement and to perform its obligations hereunder and thereunder.
(b) Neither the execution and delivery of this Agreement by
TGI nor the consummation or performance of any of the Contemplated Transactions
by TGI will contravene, conflict with, result in a violation of or give any
person the right to prevent, delay, or otherwise interfere with any of the
Contemplated Transactions pursuant to:
(i) any provision of TGI's Articles of
Incorporation or Bylaws;
(ii) any resolution adopted by the board of
directors or the stockholders of TGI;
(iii) any legal requirement or order to which TGI may
be subject; or
(iv) any contract to which TGI is a party or by which
TGI may be bound.
(c) TGI is not and will not 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.
4.3 CERTAIN PROCEEDINGS. There is no pending proceeding that has been
commenced against TGI and that challenges, or may have the effect of preventing,
delaying, making illegal, or otherwise interfering with, any of the Contemplated
Transactions.
4.4 BROKERS OR FINDERS. Except as set forth in Schedule 4.5, TGI 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.
4.5 SEC FILINGS. TGI has filed all reports required to be filed prior
to the date hereof under the Securities Exchange Act of 1934, as amended. All
such filings complied in all material respects with applicable law, and no such
filing contained a material misstatement or omission on the date of such filing.
Since their respective filing dates, no event has occurred of which TGI has
knowledge which would result in TGI's being required to amend any such reports.
16
<PAGE>
4.6 TGI STOCK. Upon consummation of the Merger and fulfillment of the
conditions set forth herein, the shares of TGI Common Stock to be issued to the
Shareholder in connection with the Merger will be fully paid, duly authorized,
validly issued and non-assessable. The delivery by TGI of the TGI Common Stock
to the Shareholder will transfer and convey to the Shareholder valid title to
such TGI Common Stock, free and clear of all liens, pledges, encumbrances and
claims of any kind, except restrictions referred to in this Agreement and under
applicable securities laws. All voting rights of TGI are vested exclusively in
the TGI Common Stock.
4.7 DISCLOSURE. No representation or warranty of TGI in this Agreement
or in the TGI Disclosure Letter contains a material misstatement or omits a
material fact necessary to make the statements herein or therein not misleading.
5. COVENANTS OF SHAREHOLDER AND TGI
5.1 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS. Except as expressly
provided in this Agreement, the Shareholder will cause all indebtedness owed to
the Company by the Shareholder or any related person of the Shareholder to be
paid in full prior to Closing.
5.2 LOAN TO SHAREHOLDER. TGI agrees to deliver to the Shareholder on
the Closing Date, in exchange for, and in accordance with the terms and
conditions of, the Shareholder's Promissory Note in the form of Exhibit "E",
which shall be secured by Shareholder's pledge of the Escrow Shares as provided
in Section 9.5 hereof, the sum of US One Hundred Seventy-Five Thousand Dollars
($175,000). The Shareholder's Promissory Note shall be non-recourse to the
extent that the maturity date of the Shareholder's Promissory Note the per share
closing trade price of the TGI Common Stock, as reported in the Wall Street
Journal is less than Six and 625/1000 Dollars ($6.625) per share. The parties
acknowledge that the loan described herein is not intended to serve as
additional merger consideration and is intended to be repaid in cash in
accordance with its terms.
5.3 SEC REPORTING. TGI agrees to file all reports required under the
Securities Exchange Act of 1934, as amended, and, at the expense of the
Shareholder, to take such other steps as necessary to allow the Shareholder to
avail himself of the resale provisions of Rule 144.
5.4 DUE DILIGENCE. The Company agrees that TGI may, prior to the
Closing Date, through its representatives, make such investigation of the
properties, books and records of the Company and of its financial and legal
condition as TGI may deem necessary or advisable in order to familiarize itself
with the Company. TGI agrees that it shall conduct its investigation in such a
manner as to minimize disruption to the Company's business.
5.5 RELEASE OF GUARANTORS. TGI, the Company and the Shareholders will
work together in good faith to obtain the release prior to the Closing Date of
any personal guarantees provided by the Shareholder to a third party with
respect to any debt or obligation of the Company.
17
<PAGE>
In the event such release has not been obtained prior to the Closing, TGI agrees
to obtain such release thereafter within thirty (30) days following the receipt
of all necessary information related thereto from the Shareholder. Until such
time as all such Shareholders guarantees have been fully released or the
underlying obligations fully satisfied, TGI will cause the Company to perform
all obligations thereunder and will fully indemnify the Shareholder against any
loss, claim or payment made with respect thereto.
6. CONDITIONS PRECEDENT TO TGI'S OBLIGATION TO CLOSE
TGI's obligation to consummate the Merger and to take the other actions
required to be taken by TGI 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 TGI, in whole or in part):
6.1 ACCURACY OF REPRESENTATIONS. All of the Shareholder'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, without giving effect to
any supplement to the Company Disclosure Letter. TGI acknowledges that the
Company Disclosure Letter may be updated as of the Closing Date, but such update
must be satisfactory to TGI in its sole discretion.
6.2 SHAREHOLDER'S PERFORMANCE. All of the covenants and obligations
that the Shareholder is 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
Company 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 TGI:
(a) an opinion of counsel to the Company and the Shareholder,
dated the Closing Date, in form acceptable to TGI; and
(b) a certificate of the Shareholder (i) evidencing the
accuracy of any of the Shareholder's representations and warranties; (ii)
evidencing the performance by the Shareholder of, or the compliance by the
Shareholder with, any covenant or obligation required to be performed or
complied with by the Shareholder; (iii) evidencing the satisfaction of any
condition referred to in this Section 6; and (iv) 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 TGI or the Shareholder or the Company,
or against any person affiliated with TGI or the Shareholder or the Company, any
proceeding (a) involving any challenge
18
<PAGE>
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 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 Merger consideration provided for herein.
6.7 DUE DILIGENCE. TGI shall have completed its investigation of the
Company's assets, business and financial condition and shall, in its sole
discretion exercised in good faith, be satisfied with the results thereof.
6.8 CONCURRENT CLOSING. The transactions contemplated by the Agreement
and Plan of Reorganization dated December 12, 1997, by and between TGI and
Rainbow Trucking Services, Inc. and the Agreement and Plan of Reorganization
dated December 12, 1997, by and between TGI and Hawk's Enterprises, Inc. shall
have been consummated on or before the Closing Date.
6.9 BOARD APPROVAL. The Board of Directors of TGI shall have approved
the Merger.
7. CONDITIONS PRECEDENT TO SHAREHOLDER'S OBLIGATION TO CLOSE
The Shareholder's and the Company's obligation to consummate the Merger
and to take the other actions required to be taken by the Shareholder and the
Company 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 the
Shareholder, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS. All of TGI'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, without giving effect to any supplement to
the TGI Disclosure Letter.
7.2 TGI'S PERFORMANCE. All of the covenants and obligations that TGI 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
Company Disclosure Letter must have been obtained and must be in full force and
effect.
19
<PAGE>
7.4 ADDITIONAL DOCUMENTS. TGI must have caused the following documents
to be delivered to the Shareholder:
(a) an opinion of Womble Carlyle Sandridge & Rice, PLLC, dated
the Closing Date, in form acceptable to the Shareholder; and
(b) a certificate of the officers of TGI (i) evidencing the
accuracy of any representation or warranty of TGI; (ii) evidencing the
performance by TGI of, or the compliance by TGI with, any covenant or obligation
required to be performed or complied with by TGI; (iii) evidencing the
satisfaction of any condition referred to in this Section 7; and (iv) 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 TGI or the Shareholder or the Company,
or against any person affiliated with TGI or the Shareholder 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.
7.6 CONCURRENT CLOSING. The transactions contemplated by the Agreement
and Plan of Reorganization dated December 12, 1997, by and between TGI and
Rainbow Trucking Services, Inc. and the Agreement and Plan of Reorganization
dated December 12, 1997, by and between TGI and Hawk's Enterprises, Inc. shall
have been consummated on or before the Closing Date.
7.7 NO MATERIAL ADVERSE CHANGE. There shall not have been any material
adverse change in the business of TGI.
8. TERMINATION
8.1 TERMINATION EVENTS. This Agreement may, by notice given prior to or
at the Closing, be terminated:
(a) by either TGI or the Shareholder 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 TGI 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 TGI to comply with its
obligations under this Agreement) and TGI has not waived such condition on or
before the Closing Date; or (ii) by the Shareholder, 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 the
Shareholder to comply with
20
<PAGE>
their obligations under this Agreement) and the Shareholder has not waived such
condition on or before the Closing Date;
(c) by mutual consent of TGI and the Shareholder; or
(d) by either TGI or the Shareholder 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 December 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
Company Disclosure Letter, the supplements to the Company Disclosure Letter, the
TGI Disclosure Letter, the supplements to the TGI Disclosure Letter and any
other certificate or document delivered pursuant to this Agreement will survive
the Closing. The right to indemnification, paymentof Damages (as defined below)
or other remedy based on such representations, warranties, covenants, and
obligations will not be affected by any investigation conducted at any time,
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 SHAREHOLDER. Subject to
the limitations set forth below, the Shareholder will indemnify and hold
harmless TGI, 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 (including incidental and consequential damages), expense
(including costs of investigation and defense and reasonable attorneys' fees) or
diminution of value, 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 the
Shareholder in this Agreement, the Company Disclosure Letter, the supplements to
the Company Disclosure Letter, or any other certificate or document delivered by
the Shareholder pursuant to this Agreement;
(b) any breach by the Shareholder of any covenant or
obligation of the Shareholder or the Company in this Agreement;
21
<PAGE>
(c) any material liability not otherwise disclosed to TGI
herein or in the Company Disclosure Letter and any supplement thereto for
product shipped or manufactured by, or any services provided by, the Company
prior to 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 any such person with the Shareholder or the Company
(or any person acting on their behalf) in connection with any of the
Contemplated Transactions.
Notwithstanding anything to the contrary in this Agreement,
the Shareholder's liability hereunder to TGI and to Indemnified Persons shall
not exceed the value of the Escrow Shares (as defined below), as determined from
time to time at the time a claim is made hereunder.
9.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY TGI. TGI will indemnify
and hold harmless the Shareholder, and will pay to the Shareholder the amount of
any Damages arising, directly or indirectly, from or in connection with (a) any
breach of any representation or warranty made by TGI in this Agreement, the TGI
Disclosure Letter, any supplement to the TGI Disclosure Letter, any Schedule to
this Agreement or in any certificate or document delivered by TGI pursuant to
this Agreement, (b) any breach by TGI of any covenant or obligation of TGI in
this Agreement, or (c) 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 TGI (or any person acting on its
behalf) in connection with any of the Contemplated Transactions.
9.4 TIME LIMITATIONS. If the Closing occurs, the Shareholder 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, 3.18
and 3.19, unless on or before the third (3rd) anniversary of the Closing Date
TGI notifies the Shareholder of a claim specifying the factual basis of that
claim in reasonable detail to the extent then known by TGI. A claim with respect
to Sections 3.3, 3.10, 3.12, 3.18 or 3.19, or a claim for indemnification or
reimbursement not based upon any representation or warranty or any covenant or
obligation to be performed and complied with prior to the Closing Date, may be
made at any time. If the Closing occurs, TGI will have no liability (for
indemnification or otherwise) with respect to any representation or warranty
other than those in Section 4.6, unless on or before the third (3rd) anniversary
of the Closing Date, the Shareholder notifies TGI of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by the
Shareholder. A claim with respect to Section 4.6, or a claim for indemnification
or reimbursement not based upon any representation or warranty or any covenant
or obligation to be performed and complied with prior to the Closing Date, may
be made at any time.
9.5 ESCROW. At the Closing, the Shareholder will deposit Twenty-Six
Thousand Four Hundred Fifteen (26,415) shares of TGI Common Stock issued to the
Shareholder pursuant to Section 2.1 hereof (the "Escrow Shares") with a bank or
trust company located within the State of Georgia which will act as an escrow
agent (the "Escrow Agent"), who will hold the Escrow Shares
22
<PAGE>
in escrow as collateral for the payment in full of the Shareholder's Promissory
Note delivered by the Shareholder in accordance with Section 2.8(a)(vi) of this
Agreement. After the first (1st) anniversary of the Closing Date, the
Shareholder shall have the right to direct the Escrow Agent to sell the Escrow
Shares; provided that (i) the resulting sales proceeds equal at least $6.625 per
share; and (ii) eighty percent (80%) of the proceeds from any such sale shall
continue to be held by the Escrow Agent as collateral for the Shareholder's
Promissory Note in replacement of the Escrow Shares. The Escrow Shares (or such
portion as then remaining in escrow) will be released to the Shareholder as
provided in the Escrow Agreement upon satisfaction of the Shareholder's
Promissory Note. The Escrow Shares will serve as collateral for the
Shareholder's Promissory Note as set forth in the Escrow Agreement.
9.6 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS.
(a) Promptly after receipt by an Indemnified Person (which
term shall include the Shareholder for purposes of this Section 9.6) 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 9.6(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 (which may
23
<PAGE>
not be unreasonably withheld). If notice is given to an indemnifying party of
the commencement of any proceeding and the indemnifying party does not, within
ten (10) days after such notice is given, give written notice to the Indemnified
Person of its election to assume the defense of such proceeding or specifically
deny all liability and responsibility therefor, including the basis for such
denial, the indemnifying party will be bound by any determination made in such
proceeding or any compromise or settlement effected by the Indemnified Person,
reasonably and in good faith. In the event that the Shareholder denies liability
hereunder as provided above, and the parties are required to litigate or
arbitrate such denial, the prevailing party in such action shall also be
entitled to recover its attorneys' fees and cost of collection or defense, as
appropriate.
(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).
9.7 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.
9.8 REMEDY. The sole and exclusive remedy of TGI against the
Shareholder for any liability arising under this Agreement or the Shareholder's
Closing Documents (except for the Employment Agreement, the Non-Competition
Agreement, Escrow Agreement and Subscription Agreement) is the indemnification
contained in Section 9.2 hereinabove. TGI acknowledges that the dollar amount of
any claim made under the Escrow Agreement is subject to the limitations
contained in Section 9.2 hereof.
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 the parties hereto shall mutually agree,
provided that TGI shall be entitled to make such announcements with regard
hereto as may be required by securities laws and regulations, provided that TGI
will provide the Shareholder with a copy of the first announcement regarding
this transaction in advance of the release thereof. Unless consented to by TGI
in advance or required by applicable law, prior to the Closing the Shareholder
shall, and shall cause the Company to, keep this
24
<PAGE>
Agreement strictly confidential and may not make any disclosure of this
Agreement to any person. The Shareholder and TGI 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 TGI will have the right to be present for any such
communication.
10.3 CONFIDENTIALITY. Between the date of this Agreement and the
Closing Date, TGI and the Shareholder will maintain in confidence, and will
cause the directors, officers, employees, agents, and advisors of TGI and the
Company to maintain in confidence, any information received from the other
party, or from anyone on behalf of the other 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. The parties acknowledge that they have previously executed a
Confidentiality Agreement and agree that all documents received by them from any
other party prior to the date hereof shall be and remain subject to such prior
Confidentiality Agreement.
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)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, 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 and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
Shareholder: Mr. Timothy M. Weller
1900 Landing Road
Prospect, Kentucky 40059
with a copy to: Gary L. Stage, Esq.
Stoll, Keenon & Park, LLP
Suite 1000
201 East Main Street
Lexington, Kentucky 40507
25
<PAGE>
TGI: Transit Group, Inc.
Overlook III
2859 Paces Ferry Road
Suite 1740
Atlanta, Georgia 30339
Attention: Philip A. Belyew, President
Facsimile No.: (770) 444-0246
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 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of Georgia, County of Cobb, or, if it has or can acquire jurisdiction, in the
United States District Court for the Northern District of Georgia, and each of
the parties consents to the non-exclusive jurisdiction of such courts (and of
the appropriate appellate courts) in any such action or proceeding and waives
any objection to venue laid therein.
10.6 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.
10.7 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.
10.8 ENTIRE AGREEMENT AND MODIFICATION. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter 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.
10.9 COMPANY DISCLOSURE LETTER. The disclosures in the Company
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 Company Disclosure Letter (other than
26
<PAGE>
an exception expressly set forth as such in the Company Disclosure Letter with
respect to a specifically identified representation or warranty), the statements
in the body of this Agreement will control.
10.10 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS. Neither party
may assign any of its rights under this Agreement without the prior 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.
10.11 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.
10.12 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.
10.13 TIME OF ESSENCE. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
10.14 GOVERNING LAW. This Agreement will be governed by the laws of the
State of Kentucky without regard to conflicts of laws principles.
10.15 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.
[EXECUTION SET FORTH ON FOLLOWING PAGE]
27
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
TGI:
TRANSIT GROUP, INC.
BY: /s/ Philip A. Belyew
PHILIP A. BELYEW, President
THE SHAREHOLDER:
/s/ Timothy Weller
TIMOTHY WELLER
THE "COMPANY":
T.W. TRANSPORT, INC.
BY: /s/ Timothy M. Weller
TIMOTHY M. WELLER, President
28
EXHIBIT 2.4
ASSET PURCHASE AGREEMENT
BETWEEN
GENERAL PARCEL CORPORATION
"BUYER"
AND
TRANSIT GROUP, INC.
"SELLER"
EFFECTIVE AS OF
SEPTEMBER 30, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1 Transfer of Assets.........................................1
1.2 Purchased Assets...........................................1
1.3 Excluded Assets............................................2
1.4 Liabilities................................................2
ARTICLE II
CONSIDERATION
2.1 Assumption of Assumed Liabilities..........................2
2.2 Seller Stock to Buyer......................................3
2.3 Allocation.................................................3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Organization and Good Standing.............................3
3.2 Authority..................................................3
3.3 Effect of Agreement........................................4
3.4 Financials; Books..........................................4
3.5 Title to Purchased Assets..................................4
3.6 Real Estate................................................4
3.7 Tangible Property..........................................4
3.8 Contracts..................................................4
3.9 Intellectual Property......................................5
3.10 Litigation.................................................5
3.11 Compliance with Laws; Permits..............................5
3.12 Environmental Protection...................................5
3.13 Insurance..................................................5
3.14 Employees; Benefits........................................5
3.15 Absence of Changes.........................................6
3.16 Seller's Shares............................................6
3.17 Taxes......................................................6
3.18 No Hart-Scott-Rodino Filings...............................7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Organization and Good Standing.............................7
4.2 Authority..................................................7
4.3 Accredited Investor Status.................................8
4.4 Effect of Agreement........................................8
(i)
<PAGE>
TABLE OF CONTENTS (Con't.)
Page
4.5 No Hart-Scott-Rodino Filings...............................8
ARTICLE V
COVENANTS OF BUYER
5.1 Employment.................................................8
5.2 WARN Act...................................................8
5.3 Insurance Benefits.........................................8
ARTICLE VI
COVENANTS OF SELLER
6.1 Stock Plan.................................................8
ARTICLE VII
COVENANTS OF BUYER AND SELLER
7.1 Interim Management.........................................9
ARTICLE VIII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
8.1 Representations, Warranties and Covenants..................9
8.2 Absence of Litigation......................................9
8.3 Consents and Approvals.....................................9
8.4 Legal Opinion..............................................9
ARTICLE IX
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
9.1 Representations, Warranties and Covenants.................10
9.2 Absence of Litigation.....................................10
9.3 Consents and Approvals....................................10
9.4 Legal Opinion.............................................10
ARTICLE X
CLOSING
10.1 Closing...................................................10
10.2 Deliveries by Seller......................................10
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by Seller.................................12
11.2 Indemnification by Buyer..................................12
(ii)
<PAGE>
TABLE OF CONTENTS (Con't.)
Page
11.3 Notice of Claim...........................................12
11.4 Defense...................................................13
11.6 Certain Limitations of Seller.............................13
11.8 Reduction by Insurance Proceeds...........................14
11.9 Reduction by Tax Benefit..................................14
ARTICLE XII
MISCELLANEOUS
12.1 Further Assurances........................................14
12.2 Termination...............................................14
12.3 Risk of Loss..............................................15
12.4 Brokers...................................................15
12.5 Tax Filings...............................................15
12.6 Expenses..................................................15
12.7 Publicity.................................................15
12.8 Notices...................................................15
12.9 Governing Law.............................................16
12.10 Counterparts..............................................16
12.11 Assignment................................................17
12.12 Third Party Beneficiaries.................................17
12.13 Headings..................................................17
12.14 Amendments................................................17
12.16 Severability..............................................17
12.17 Entire Agreement..........................................17
(iii)
<PAGE>
SCHEDULES
Schedule 1.2 Purchased Assets
Schedule 1.3(c) Excluded Assets
Schedule 2.1(a) Capital Equipment Leases
Schedule 2.1(b) Facility Leases
Schedule 2.1(c) Other Assumed Liabilities
Schedule 2.3 Allocation
Schedule 3.1 Foreign Qualifications
Schedule 3.3 Required Consents
Schedule 3.8(a) Contracts
Schedule 3.8(b) Defaults
Schedule 3.9 Intellectual Property
Schedule 3.10 Litigation
Schedule 3.11 Licenses
Schedule 3.13 Insurance
Schedule 3.14 Employees; Benefits
Schedule 3.15 Absence of Changes
EXHIBITS
Exhibit "A" Opinion of Seller's Counsel
Exhibit "B" Opinion of Buyer's Counsel
(iv)
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (together with all Schedules and
Exhibits hereto, this "Agreement"), effective as of September 30, 1997, is
entered into by and between TRANSIT GROUP, INC., a Florida corporation
("Seller"), and GENERAL PARCEL CORPORATION, a Florida corporation ("Buyer").
R E C I T A L S:
1. Seller is the owner and operator of a next-day parcel
delivery business operating in the States of Florida and Georgia, and is in
possession of assets in the States of North Carolina (including the North
Carolina courier business conducted by GPS Acquisition Corp.) and South Carolina
(the "Business").
2. Seller desires to sell, and Buyer desires to buy, certain
of the assets of Seller used in or relating to the operation of the Business, on
the terms and conditions set forth in this Agreement.
THEREFORE, Seller and Buyer agree as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1 Transfer of Assets. Seller agrees to sell, assign,
transfer and deliver to Buyer, and Buyer agrees to purchase and accept from
Seller, at the Closing (as defined in Section 10.1) all of the assets and
properties of Seller of every kind and description used by Seller in connection
with the operations of the Business, but excluding certain assets described in
Section 1.3. The assets being sold hereunder are collectively referred to as the
"Purchased Assets," and the assets described in Section 1.3 are collectively
referred to as the "Excluded Assets."
1.2 Purchased Assets. The Purchased Assets specifically
include all of Seller's assets and properties of every kind and description used
in the Business, including, without limitation, all vehicles, equipment,
machinery, business records, inventory, customer lists, tradenames, trademarks,
intellectual property, all rights of Seller (including rights to security and
similar deposits) under the Capital Equipment Leases and the Facility Leases
(each as defined below), accounts receivable and all items set forth on Schedule
1.2 hereto, but excluding the Excluded Assets described below.
Upon reasonable notice to Buyer, Seller shall have access to,
and opportunity to copy at its own expense, any or any part of the business
records relating to the Business and the Purchased Assets for a period of seven
(7) years from the Closing Date.
1
<PAGE>
1.3 Excluded Assets. The following assets shall be excluded from the
Purchased Assets and shall be retained by Seller:
(a) Cash. All cash on hand and on deposit in banks, cash
equivalents and investments as of September 30, 1997.
(b) Certain Records. Minute books, stock books or other
corporate records of Seller.
(c) Other Assets. The assets listed on Schedule 1.3(c).
(d) Stock, Assets and Truckload Hauling Operations of Seller's
Subsidiaries. All stock, assets and going business of Seller's
truckload hauling operations and each of Seller's subsidiaries which
are engaged in such business.
(e) Notes Receivable from Seller's Subsidiaries. All notes
receivable from Seller's subsidiaries.
1.4 Liabilities. The Purchased Assets shall be sold and
conveyed to Buyer free and clear of all liabilities, obligations, liens,
security interests and encumbrances whatsoever (collectively, "Liens", or
individually, a "Lien"), except for Assumed Liabilities (as defined below);
provided, however, that Buyer will assume at Closing the obligations under the
Contracts (as defined in Section 3.8) that are unperformed as of the Effective
Time (as defined in Section 10.1).
ARTICLE II
CONSIDERATION
2.1 Assumption of Assumed Liabilities. As consideration for
the Purchased Assets, Buyer shall:
(a) Assume Seller's obligations which are outstanding at or
which arise after the Effective Time under the equipment lease
agreements of Seller relating to the Business including, but not
limited to, the equipment lease agreements set forth on Schedule 2.1(a)
(collectively, the "Capital Equipment Leases"), provided that Buyer
shall have the right, in its sole discretion, not to assume, and
instead to prepay, on the Closing Date any or all of the obligations
which otherwise are to be assumed by the Buyer under the Capital
Equipment Leases, and provided, further, that Buyer shall cause Seller
to be fully released and discharged from the liabilities and
obligations under the Capital Equipment Leases.
(b) Assume Seller's obligations which are outstanding at or
which arise after the Effective Time under the facility leases of
Seller relating to the Business including, but not limited to, the
facility leases set forth on Schedule 2.1(b) (collectively, the
"Facility Leases"), provided that Buyer shall cause Seller to be fully
released and discharged from the liabilities and obligations under the
Facility Leases.
2
<PAGE>
(c) Assume all of Seller's liabilities which are outstanding
at or which arise after the Effective Time (including liabilities
relating to the North Carolina courier business conducted by GPS
Acquisition Corp.) relating to the Business including, but not limited
to, the liabilities set forth on Schedule 2.1(c) (collectively, along
with the obligations assumed by Buyer under the Capital Equipment
Leases and the Facility Leases, the "Assumed Liabilities").
2.2 Seller Stock to Buyer. Seller shall issue Eight Hundred
Seventy Thousand (870,000) shares of Seller's common stock to Buyer on the
Closing Date, such shares to be restricted shares, bearing the legend
hereinafter set forth:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD IN
RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
THE FEDERAL AND STATE SECURITIES LAWS. THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED,
EXCEPT IN A TRANSACTION WHICH IS REGISTERED UNDER, EXEMPT
FROM, OR OTHERWISE IN COMPLIANCE WITH THE FEDERAL AND STATE
SECURITIES LAWS, AS TO WHICH THE ISSUER HAS RECEIVED SUCH
ASSURANCES AS THE ISSUER MAY REQUEST, WHICH MAY INCLUDE A
SATISFACTORY OPINION OF COUNSEL.
2.3 Allocation. The Assumed Liabilities shall be allocated
among the Purchased Assets as set forth in Schedule 2.3 hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization and Good Standing. Seller is a corporation
duly organized, validly existing and its status is active under the laws of the
State of Florida. Seller has all requisite power and authority to own, operate
and lease the Purchased Assets and to conduct the operations of the Business as
presently conducted. Except where the failure to be so qualified would not have
a material adverse effect on the operation of the Business or the Purchased
Assets, Seller is duly qualified to do business as a foreign corporation and is
in good standing in the jurisdictions in which it is required to be so qualified
and such jurisdictions are listed on Schedule 3.1.
3.2 Authority. Seller has all requisite power and authority to
execute and deliver this Agreement and to perform the transactions contemplated
hereby. The execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action on the part of Seller. This
Agreement has been duly executed and delivered by Seller and constitutes a valid
and binding obligation of Seller, enforceable against Seller in accordance with
its terms, except that the
3
<PAGE>
enforceability thereof may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting creditor's rights generally and by principles of
equity regarding the availability of remedies.
3.3 Effect of Agreement. The execution, delivery and
performance of this Agreement do not and will not: (a) conflict with the
Articles of Incorporation or Bylaws of Seller; (b) to the best knowledge of
Seller, violate any law or any rule or regulation of any governmental body or
administrative agency, or conflict with any judicial or administrative order or
decree relating to Seller or the Purchased Assets; (c) constitute a breach or
default under any Contract or any other agreement or instrument by which Seller
is bound or the Purchased Assets are affected, except as set forth in Schedule
3.3; (d) create any Lien on any of the Purchased Assets; or (e) except as set
forth on Schedule 3.3, require any consent, notice to or filing with any
governmental authority or administrative agency or any private person or firm on
behalf of Seller, except (i) with respect to clauses (c) and (d), any of the
foregoing which do not and will not have a material adverse effect on the
condition (financial or otherwise) of the Business or the Purchased Assets
(hereinafter a "Material Adverse Effect") and (ii) with respect to clause (e),
such consents or notices as the failure to obtain or give would not have a
Material Adverse Effect. The matters described on Schedule 3.3 are referred to
as the "Required Consents."
3.4 Financials; Books. The unaudited balance sheets of Seller
as of June 30, 1997 and audited balance sheets as of December 31, 1996 and 1995,
and statements of income and cash flows of Seller for each of the years (or
portions thereof) then ended are hereinafter referred to as the "Financial
Statements." The Financial Statements (a) are in accordance with the books and
records of the Seller; (b) present fairly the assets, liabilities and financial
condition of Seller as of the respective dates thereof and the results of
operations for the periods then ending; and (c) the audited financials have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods involved. Seller has no material
liability or obligation that is not reflected or reserved against in the
Financial Statements, except for those that are not required by generally
accepted accounting principles to be included therein. The books and records of
Seller relating to the Purchased Assets have been maintained in all material
respects in accordance with generally accepted accounting principles applied on
a consistent basis.
3.5 Title to Purchased Assets. Seller has good and marketable
title to all of the Purchased Assets, free and clear of any Liens, other than
Assumed Liabilities. The Purchased Assets constitute all of the assets required
to operate the Business in the manner presently operated by Seller.
3.6 Real Estate. Schedule 2.1(b) contains a true and correct
listing of all real property leased by Seller and used in connection with the
Business.
3.7 Tangible Property. All tangible property included in the
Purchased Assets is being sold "AS IS, WHERE IS" and Seller makes no warranties
whatsoever with respect thereto, and EXPRESSLY DISCLAIMS all implied warranties
of MERCHANTABILITY and FITNESS FOR A PARTICULAR PURPOSE and all other
warranties, express or implied, with respect thereto.
3.8 Contracts. Schedule 3.8(a) lists all contracts,
commitments, agreements, leases, licenses, understandings and obligations,
whether written or oral, to which Seller is party or by which
4
<PAGE>
Seller or the Purchased Assets is bound or affected, that are material to the
operation of the Business (collectively, the "Contracts"). Seller has delivered
to Buyer true and complete copies of all written Contracts and true and complete
memoranda of all oral Contracts, including any and all amendments thereto. Each
of the Contracts is valid, binding and enforceable in accordance with its terms
(except that enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally and
by principles of equity regarding the availability of remedies), and is in full
force and effect. Except as set forth on Schedule 3.8(b), there are no existing
defaults, and to the best of Seller's knowledge no events or circumstances have
occurred which, with or without notice or lapse of time or both, would
constitute defaults, under any of the Contracts and which would have a Material
Adverse Effect. The assignment of the Contracts by Seller to Buyer will not,
with respect to any Contract, (i) constitute a default or accelerate the
obligations thereunder, (ii) require the consent of any person or party, except
for the Required Consents, or (iii) affect the continuation, validity and
effectiveness thereof or the terms thereof.
3.9 Intellectual Property. In addition to Seller's common law
rights to the corporate logo relating to General Parcel Service, Schedule 3.9
lists all other intellectual property rights used in connection with the
Business, and, with respect to the marks, a list of services with which such
marks are used, the date of first use of such marks and United States
registrations related thereto. To the best of Seller's knowledge, the marks have
been in continuous use since the date of first use set forth in Schedule 3.9,
and the marks are now used in interstate and intrastate commerce.
3.10 Litigation. Except as set forth on Schedule 3.10, there
are no claims, actions, or suits pending, or to the best knowledge of Seller,
threatened, against Seller or the Business or affecting the Purchased Assets,
which would, in the aggregate, if resolved adversely to Seller, have a Material
Adverse Affect.
3.11 Compliance with Laws; Permits. There is no outstanding
or, to the best knowledge of Seller, threatened, any order or decree of any
court, governmental agency or arbitration tribunal against or involving Seller,
the Business or the Purchased Assets. Seller is currently in compliance with all
laws, rules, regulations and licensing requirements of all federal, state, local
and foreign authorities applicable to the properties and operations of the
Business, except for any instances of non-compliance which do not have a
Material Adverse Effect. Seller has obtained all permits, certificates and
licenses required for the conduct of the Business and the ownership of the
Purchased Assets, (except for those the absence or violation of which does not
have a Material Adverse Effect), all of which are described on Schedule 3.11.
3.12 Environmental Protection. To Seller's knowledge, the
ownership or use of its premises and the Purchased Assets, Seller's occupancy
and operation thereof, and the conduct of the Business has been and are in
compliance in all material respects with all applicable federal, state and local
laws, ordinances and regulations relating to safety, health, pollution,
environmental protection, hazardous substances and related matters.
3.13 Insurance. Schedule 3.13 describes all insurance policies
maintained by Seller with respect to the Business and the Purchased Assets.
5
<PAGE>
3.14 Employees; Benefits. Schedule 3.14 sets forth a complete
and accurate list of all employees of the Seller involved in the Business who
will be hired as of the Effective Time by Buyer, and a description of their
salaries, wages and benefits. Except as set forth on Schedule 3.14, there are no
Plans, as defined below, contributed to, maintained or sponsored by Seller, to
which Seller is obligated to contribute or with respect to which Seller has any
liability or potential liability, whether direct or indirect, including all
Plans contributed to, maintained or sponsored by each member of the controlled
group of companies, within the meaning of Sections 414(b), 414(c), and 414(m) of
the Internal Revenue Code of 1986, as amended, of which Seller is a member to
the extent Seller has any potential liability with respect to such Plans. For
purposes of this Agreement, the term "Plans" shall mean: (a) employee benefit
plans as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), whether or not funded and whether or not
terminated, (b) employment agreements, and (c) personnel policies or fringe
benefit plans, policies, programs and arrangements, whether or not subject to
ERISA, whether or not funded, and whether or not terminated, including without
limitation, stock bonus, deferred compensation, pension, severance, bonus,
vacation, travel, incentive, and health, disability and welfare plans.
3.15 Absence of Changes. Except as set forth on Schedule 3.15,
since the date of the most recent Financial Statements and the date of this
Agreement, Seller has conducted the operations of the Business only in the
ordinary course, and has not:
(a) Suffered any uninsured damage to any asset of the Business
that would have a Material Adverse Effect;
(b) Sold or disposed of any assets used in the operation of
the Business, except for (i) assets consumed or disposed of in the
ordinary course of business, (ii) assets disposed of in connection with
the acquisition of replacement property of equivalent kind and value;
or (iii) assets that are no longer used or useful in the operations of
the Business;
(c) Made any general wage increase for its employees as a
group;
(d) Amended or terminated any Contract;
(e) Incurred any material obligation or liability, except
normal trade or business obligations incurred in the ordinary course of
business; or
(f) Introduced any new method of management, operations or
accounting.
3.16 Seller's Shares. Seller's shares being delivered at
Closing have been validly issued, and are fully paid and non-assessable and
authorized for listing on the Nasdaq Stock Market. No consent, approval or
filing with any person or entity is required in connection with the issuance of
Seller's shares and the issuance of Seller's shares will not trigger preemptive
rights with respect to any person or entity.
6
<PAGE>
3.17 Taxes. For the purposes of this Agreement, the term
"taxes" shall include all federal, state, local and foreign taxes, fees and
other governmental charges, and interest and penalties with respect thereto, and
any payment required under any tax allocation or sharing agreement. All tax and
information returns and reports of Seller and of any member of any affiliated
group of corporations (within the meaning of Section 1504 of the Internal
Revenue Code of 1986, as amended, as in effect at the time of the due date for
the filing of such returns and reports) of which Seller is or was a member
required by law to be filed have been duly filed, and are accurate, true and
complete in all material respects. All taxes upon Seller or for which Seller may
be liable, or in respect of any of the assets, income or franchises of Seller,
have been paid by it, except for any taxes which are not yet due and payable and
except as set forth on Schedule 2.1(c), there are no tax liens upon any of the
properties or assets of Seller and no foreign, federal, state, local or other
taxing authority has provided Seller or any member of any affiliated group of
corporations of which Seller is or was a member with any notice of any questions
relating to, or claims asserted for, taxes for which Seller may be liable.
Neither Seller nor any member of any affiliated group of corporations (as
defined above) of which Seller is or was a member has granted or been requested
to grant waivers of any statutes of limitations applicable to any claim for
taxes or has agreed to any extension of time with respect to any tax assessment
or deficiency for taxes for which Seller may be liable. Except as set forth on
Schedule 2.1(c), all taxes which Seller is required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid over to the proper governmental authorities in a timely manner. None
of the returns filed by or on behalf of Seller has been or is being audited by
any federal, state, local, foreign or other taxing authority which audit has not
been concluded. The accruals and reserves for taxes reflected on the Seller's
financial statements are adequate to cover all liabilities for all accrued or
unpaid taxes for which Seller has any liability.
3.18 No Hart-Scott-Rodino Filings. The size and nature of the
transactions contemplated by this Agreement do not require any filing or
notification to be made by any party under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, or any successor law, and regulations and
rules issued by the U.S. Department of Justice or the Federal Trade Commission
pursuant to that act or any successor law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization and Good Standing. Buyer is a corporation
duly incorporated, validly existing and its status is active under the laws of
the State of Florida. Buyer is, or will be at the Closing, duly qualified to do
business as a foreign corporation and in good standing in all other
jurisdictions in which the ownership of the Purchased Assets or the operation of
the Business make such qualification necessary.
4.2 Authority. Buyer has all requisite power and authority to
execute and deliver this Agreement and to perform the transactions contemplated
hereby. The execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate and shareholder action on the part of
7
<PAGE>
Buyer. This Agreement has been duly executed and delivered by Buyer and
constitutes a valid and binding obligation of Buyer, enforceable against Buyer
in accordance with its terms except that the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting creditor's rights generally and by principles of equity regarding the
availability of remedies.
4.3 Accredited Investor Status. Buyer is an "accredited
investor" as defined in Regulation D promulgated under the Securities Act of
1933, as amended.
4.4 Effect of Agreement. The execution, delivery and
performance of this Agreement do not and will not (a) conflict with the Articles
of Incorporation or Bylaws of Buyer; (b) to the best knowledge of Buyer, violate
any law or any rule or regulation of any governmental body or administrative
agency, or conflict with any judicial or administrative order or decrees
relating to Buyer; (c) constitute a breach or default under any contract or any
other agreement or instrument by which Buyer is bound; or (d) to the best
knowledge of Buyer, require any consent, notice to or filing with any
governmental authority or administrative agency or any private person or firm on
behalf of Buyer.
4.5 No Hart-Scott-Rodino Filings. The size and nature of the
transactions contemplated by this Agreement do not require any filing or
notification to be made by any party under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, or any successor law, and regulations and
rules issued by the U.S. Department of Justice or the Federal Trade Commission
pursuant to that act or any successor law.
ARTICLE V
COVENANTS OF BUYER
5.1 Employment. Buyer shall hire as of the Effective Time all
employees of the Seller involved in the Business at base salaries or hourly
wages not less than that paid by Seller immediately prior to the Effective Time.
Except for Seller's Anniversary Stock Award Plan, Employee Stock Purchase Plan
and Incentive Stock Option Plan, Buyer shall assume Seller's obligations for
employee health insurance and other benefits including, but not limited to,
vested and unused vacation pay.
5.2 WARN Act. Buyer shall be responsible for providing the
notifications, if any, required by the Worker Adjustment and Retraining
Notification Act of 1988 (the "WARN Act") with respect to employees who
experience an employment loss within the meaning of the WARN Act following the
Effective Time, and Buyer shall be responsible for and assumes any liability
arising from any failure to provide such notifications. Buyer further covenants
that it has no present intention of closing any plants or causing any mass
layoff, as defined in the WARN Act, within sixty (60) days following the
Effective Time.
5.3 Insurance Benefits. As of the Effective Time, Buyer shall
assume Seller's Blue Cross Blue Shield of Florida insurance plan and shall
provide identical coverage to Buyer's employees, without any gaps, such that no
notice pursuant to the Congressional Omnibus Budget Reconciliation Act ("COBRA")
shall be required.
8
<PAGE>
ARTICLE VI
COVENANTS OF SELLER
6.1 Stock Plan. Seller shall be responsible for terminating
the participation in Seller's Anniversary Stock Award Plan, Employee Stock
Purchase Plan, Incentive Stock Option Plan of General Parcel Service, Inc. and
any other investment-type plan of all employees of Seller involved in the
Business. Any notices or stock, cash or other financial consideration that may
be required to be given in connection with the termination of such plans shall
be the sole and exclusive obligation of Seller.
ARTICLE VII
COVENANTS OF BUYER AND SELLER
7.1 Interim Management. Buyer agrees to operate the Business
and Seller agrees to allow Buyer to operate the Business from the Effective Time
of this Agreement through the Closing Date (the "Interim Management Period"). In
consideration of Buyer's operation of the Business, Buyer shall assume the
liabilities of the Business including, but not limited to, the liabilities set
forth in Schedules 2.1(a), 2.1(b) and 2.1(c). As the operator of the Business,
Buyer shall have and shall enjoy all profits and losses of the Business during
the Interim Management Period and shall be free to: (a) hire or terminate
employees; (b) add or terminate customers; (c) pay and/or negotiate the
liabilities set forth on Schedules 2.1(a), 2.1(b) and 2.1(c); and (d) perform
all other functions normally associated with the ownership of a business except
Buyer shall not retitle, sell or encumber any of the assets of the Business
without the prior written consent of Seller.
ARTICLE VIII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions on or before the Closing Date:
8.1 Representations, Warranties and Covenants. The
representations and warranties of Seller contained in this Agreement shall have
been true and correct in all material respects on the date of this Agreement and
shall be true and correct in all material respects on the Closing Date as though
made on and as of the Closing Date, and Seller shall have duly performed and
complied in all material respects with all covenants and obligations required by
this Agreement to be performed or complied with by it on or prior to the
Closing.
8.2 Absence of Litigation. No action or proceeding shall be
pending by or before any court or other governmental body or agency seeking to
restrain, prohibit or invalidate the transactions contemplated by this
Agreement.
8.3 Consents and Approvals. All (a) Required Consents and (b)
orders or notifications of, or registrations, declarations or filings with, or
expiration of waiting periods imposed by, any applicable governmental or
judicial authority shall have been made or obtained or shall have occurred.
9
<PAGE>
8.4 Legal Opinion. Buyer shall have received from Womble
Carlyle Sandridge & Rice, PLLC, counsel to Seller, an opinion, dated the Closing
Date, in the form of Exhibit "A".
ARTICLE IX
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions
contemplated by this Agreement are subject to the satisfaction of each of the
following conditions on or before the Closing Date:
9.1 Representations, Warranties and Covenants. The
representations and warranties of Buyer contained in this Agreement shall have
been true and correct in all material respects on the date of this Agreement,
and shall be true and correct in all material respects on the Closing Date as
through made on and as of the Closing Date, and Buyer shall have duly performed
and complied in all material respects with all covenants and obligations
required by this Agreement to be performed or complied with by it on or before
the Closing Date.
9.2 Absence of Litigation. No action or proceeding shall be
pending by or before any court or other governmental body or agency seeking to
restrain, prohibit or invalidate the transactions contemplated by this
Agreement.
9.3 Consents and Approvals. All (a) Required Consents and (b)
orders or notifications of, or registrations, declarations or filings with, or
expiration of waiting periods imposed by, any applicable governmental or
judicial authority shall have been made or obtained or shall have occurred.
9.4 Legal Opinion. Seller shall have received from LeBoeuf,
Lamb, Greene & MacRae L.L.P., counsel to Buyer, an opinion, dated the Closing
Date, in the form of Exhibit "B".
ARTICLE X
CLOSING
10.1 Closing. If this Agreement is not terminated pursuant to
Section 12.2, the closing of the sale of the Purchased Assets (the "Closing")
shall take place at the offices of Buyer at 10:00 a.m., local time, on the fifth
(5th) business day after the satisfaction of the conditions in Articles VIII and
IX hereof, or such other time and date as may be mutually agreed upon by the
parties hereto (the "Closing Date"). Except as set forth in this Agreement, for
purposes of passage of title, risk of loss, allocation of expenses and other
economic effects, the Closing when completed shall be deemed to have occurred at
12:01 a.m., local time, on September 30, 1997 (the "Effective Time").
10.2 Deliveries by Seller. At the Closing, Seller shall
deliver or cause to be delivered to Buyer the following:
(a) Certificates of title, duly endorsed for
transfer, with respect to all motor vehicles included in the
Purchased Assets.
10
<PAGE>
(b) Notarized Bill of Sale.
(c) Assignment and Assumption Agreement relating to
the Capital Equipment Leases.
(d) Assignment and Assumption Agreement relating to
the Facility Leases.
(e) Such other instruments of transfer as Buyer may
reasonably request to convey and vest in Buyer all of Seller's
right, title and interest in and to all of the remaining
Purchased Assets.
(f) Assignment of Trademarks and such other
instruments of assignment as may be necessary to file with the
appropriate governmental agencies to transfer to Buyer all
rights in the trademarks.
(g) Evidence that all Required Consents have been
obtained.
(h) The legal opinion referred to in Section 8.4.
(i) An incumbency certificate containing a certified
copy of all corporate resolutions of the Seller authorizing
the execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated herein,
accompanied by the certification of the Secretary of Seller to
the effect that such resolutions are true and correct, in full
force and effect and have not been amended, modified or
rescinded.
10.3 Deliveries by Buyer. At the Closing, Buyer shall deliver
or cause to be delivered to Seller the following:
(a) Notarized Bill of Sale.
(b) Assignment and Assumption Agreement relating to
the Capital Equipment Leases.
(c) Assignment and Assumption Agreement relating to
the Facility Leases.
(d) Assignment and Assumption Agreement relating to
the other Assumed Liabilities.
11
<PAGE>
(e) Such other instruments of transfer as Seller may
reasonably request to convey and vest in Buyer all of Seller's
right, title and interest in and to all of the remaining
Purchased Assets.
(f) The legal opinion referred to in Section 9.4.
(g) An incumbency certificate containing a certified
copy of all corporate resolutions of the Buyer authorizing the
execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated herein,
accompanied by the certification of the Secretary of Buyer to
the effect that such resolutions are true and correct, in full
force and effect and have not been amended, modified or
rescinded.
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by Seller. Subject to Section 11.6,
Seller shall indemnify, defend and hold harmless Buyer and its officers,
directors and affiliates (the "Buyer Indemnitees") from, against, and with
respect to any and all loss, damage, claim, obligation, liability, cost and
expense (including without limitation reasonable attorneys' fees and costs and
expenses incurred in investigating, preparing, defending against or prosecuting
any litigation, claim, proceeding or demand), of any kind or character (a
"Loss") arising out of or in connection with any of the following:
(a) Any breach of the representations or warranties
of Seller contained in this Agreement.
(b) Any failure by Seller to perform or observe any
covenant, agreement or condition to be performed or observed
by it pursuant to this Agreement.
11.2 Indemnification by Buyer. Buyer shall indemnify, defend
and hold harmless Seller and its officers, directors and affiliates (the "Seller
Indemnitees") from, against and with respect to any Loss arising out of or in
connection with any of the following:
(a) Buyer's ownership and operation of the Business
and the Purchased Assets including, but not limited to, any
and all of the Assumed Liabilities.
(b) Any breach of the representations and warranties
of Buyer contained in this Agreement.
(c) Any failure by Buyer to perform or observe any
covenant, agreement or condition to be performed or observed
by it pursuant to this Agreement, other than those covered by
Section 11.2(a) above.
12
<PAGE>
11.3 Notice of Claim. Any party seeking to be indemnified
hereunder (the "Indemnified Party") shall, within fifteen (15) days following
discovery of the matters giving rise to a Loss, notify the party from whom
indemnity is sought (the "Indemnity Obligor") in writing of any claim for
recovery, specifying in reasonable detail the nature of the Loss and the amount
of the liability estimated to arise therefrom. If the Indemnified Party does not
so notify the Indemnity Obligor within said fifteen (15) days, such claim shall
be barred, and the Indemnity Obligor shall have no obligation with respect
thereto. The Indemnified Party shall provide to the Indemnity Obligor as
promptly as practicable thereafter all information and documentation requested
by the Indemnity Obligor to verify the claim asserted.
11.4 Defense. If the facts pertaining to a Loss arise out of
the claim of any third party, or if there is any claim against a third party
available by virtue of the circumstances of the Loss, the Indemnity Obligor may,
by giving written notice to the Indemnified Party within thirty (30) days
following its receipt of the notice of such claim, elect to assume the defense
or the prosecution thereof, including the employment of counsel or accountants
at its cost and expense; provided, however, that during the interim the
Indemnified Party shall use its best efforts to take all action (not including
settlement) reasonably necessary to protect against further damage or loss with
respect to the Loss. The Indemnified Party shall have the right to employ
counsel separate from counsel employed by the Indemnity Obligor in any such
action and to participate therein, but the fees and expenses of such counsel
shall be at the Indemnified Party's own expense. Whether or not the Indemnity
Obligor chooses so to defend or prosecute such claim, all the parties hereto
shall cooperate in the defense or prosecution thereof. The Indemnity Obligor
shall not be liable for any settlement of any such claim effected without its
prior written consent. In the event of payment by the Indemnity Obligor to the
Indemnified Party in connection with any Loss arising out of a third party
claim, the Indemnity Obligor shall be subrogated to and shall stand in the place
of the Indemnified Party with respect to such Indemnified Matter. The
Indemnified Party shall cooperate with the Indemnity Obligor in prosecuting any
subrogated claim.
11.5 Time for Claims. The representations and warranties
contained in Sections 3.12, 3.14 and 3.17 shall survive the execution and
delivery of this Agreement and the Closing until the expiration of all
applicable statutes of limitation (including, without limitation, all periods of
extension, whether automatic or permissive) affecting such representations or
warranties. All other representations and warranties of the parties hereto
contained in this Agreement or otherwise made in writing in connection with the
transactions contemplated hereby shall survive two (2) years after the Closing
Date. Except for claims made in connection with Sections 3.12, 3.14 and 3.17,
any claim asserted with respect to the items in Section 11.1 must be submitted
to the Indemnity Obligor in writing as set forth in Section 11.3, or invoked in
official proceedings, within sixty (60) days after the expiration of all
applicable statutes of limitation (including, without limitation, all periods of
extension, whether automatic or permissive) affecting such representations and
warranties.
11.6 Certain Limitations of Seller. Notwithstanding the
provisions of Section 11.1, Seller shall not have any indemnification obligation
under this Agreement unless and until the aggregate amount of the Losses of the
Indemnified Party exceeds $125,000 in the aggregate, whereupon Seller shall be
liable to indemnify the Indemnified Party for all of such Losses. In no event
13
<PAGE>
shall the aggregate amount for which Seller shall be liable as an Indemnity
Obligor hereunder exceed $1,000,000. In addition, notwithstanding the provisions
of Section 11.1, Seller shall not have any indemnification obligation under this
Agreement in the event of a Change of Control of Buyer. A "Change of Control"
shall be deemed to have occurred on the earliest of the following dates:
(a) The date any entity or person shall have become the
beneficial owner of, or have obtained voting control over,
fifty percent (50%) or more of the outstanding common stock of
Buyer;
(b) The date the shareholders of Buyer approve a definitive
agreement (i) to merge or consolidate Buyer with or into
another corporation, in which Buyer is not the continuing or
surviving corporation or pursuant to which any shares of
common stock of Buyer would be converted into cash, securities
or other property of another corporation, other than a merger
or consolidation of Buyer in which holders of common stock
immediately prior to the merger or consolidation have the same
proportionate ownership of common stock of the surviving
corporation immediately after the merger as immediately
before, or (ii) to sell or otherwise dispose of all or
substantially all the assets of Buyer; or
(c) The date there shall have been a change in a majority of
the Board of Directors of Buyer within a 12-month period
unless the nomination for election by Buyer's shareholders of
each new director was approved by the vote of two-thirds of
the directors then still in office who were in office at the
beginning of the 12-month period.
11.7 Certain Limitations of Buyer. Buyer shall not have any
indemnification obligation under Sections 11.2(b) or 11.2(c) of this Agreement
unless and until the aggregate amount of the Losses of the Indemnified Party
exceeds $75,000 in the aggregate, whereupon Buyer shall be liable to indemnify
the Indemnified Party only to the extent that such Losses exceed $75,000. In no
event shall the aggregate amount for which Buyer shall be liable as an Indemnity
Obligor hereunder exceed $1,000,000.
11.8 Reduction by Insurance Proceeds. The amount payable by an
Indemnity Obligor to an Indemnified Party with respect to a Loss shall be
reduced by the amount of any insurance proceeds received by the Indemnified
Party with respect to the Loss, and each of the parties hereby agrees to use its
best efforts to collect any and all insurance proceeds to which it may be
entitled in respect of any Loss.
11.9 Reduction by Tax Benefit. The amount payable by an
Indemnity Obligor with respect to a Loss shall be net of any federal, state or
local tax benefit realized by the Indemnified Party with respect to the Loss.
11.10 Prior Investigation. Any furnishing of information to
Buyer by Seller pursuant to, or otherwise in connection with, this Agreement,
including without limitation, any
14
<PAGE>
information contained in any document, contract, book or record of Seller to
which Buyer shall have access or any information obtained by, or made available
to, Buyer as a result of any investigation made by or on behalf of Buyer prior
to or after the date of this Agreement, shall not affect or be deemed a waiver
of Buyer's right to rely on any written statement, representation, warranty,
covenant or agreement made or deemed made by Seller.
ARTICLE XII
MISCELLANEOUS
12.1 Further Assurances. Each party shall take all such
actions as may reasonably be requested by any party hereto in order to carry out
the transactions contemplated by this Agreement and, after the Closing Date,
will cooperate and make available to each other all books and records that any
party may reasonably require. Seller shall reimburse Buyer $15,000 for Seller's
use of Buyer's employees from October 1, 1997 through January 31, 1998. Seller
may not use Buyer's employees after January 31, 1998 without the express
approval of Buyer's President.
12.2 Termination. This Agreement (other than the obligations
contained in Section 12.6 and Section 12.7) may be terminated as to all parties
hereto and the transactions contemplated herein abandoned at any time prior to
the Closing by:
(a) the mutual consent of all parties hereto;
(b) Buyer at any time after September 30, 1998, if at such
time the conditions set forth in Article VIII hereof have not been
satisfied through no fault of Buyer, failure to satisfy such conditions
has a Material Adverse Effect, and Buyer gives Seller notice of such
fact; or
(c) Seller at any time after September 30, 1998, if at such
time the conditions set forth in Article IX hereof have not been
satisfied through no fault of Seller, failure to satisfy such
conditions has a Material Adverse Effect, and Seller gives Buyer notice
of such fact.
12.3 Risk of Loss. The risk of loss, damage or condemnation of
any of the Purchased Assets from any cause whatsoever shall be borne by Buyer at
all times.
12.4 Brokers. Each party represents and warrants to the other
(a) that no brokers or agents have been retained or employed by it, and (b) that
there are no claims for any brokerage commission, finder's fee or similar
payment due or claimed to be due from it with respect to this transaction.
12.5 Tax Filings. Each of the parties acknowledges its
understanding of the requirement under Section 1060 of the Internal Revenue Code
of 1986, as amended, for the filing by each of Form 8594 for its respective tax
year in which the Closing occurs. Each of Seller and
15
<PAGE>
Buyer agrees to allocate the Assumed Liabilities among the Purchased Assets in
accordance with Schedule 2.3 hereto.
12.6 Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense, whether or not the sale of the Purchased
Assets is consummated. Other than sales taxes or recording, transfer and filing
fees that are associated with the transfer of title of the motor vehicles of
Seller to Buyer, sales taxes, if any, and recording, transfer and filing fees on
the transfer of the Purchased Assets shall be borne by Buyer. Seller shall
reimburse Buyer for all sales taxes and recording, transfer and filing fees that
are associated with the transfer of title of the motor vehicles of Seller to
Buyer.
12.7 Publicity. Seller may make such press releases and
announcements concerning the transactions contemplated by this Agreement as
necessary to comply with applicable laws and the rules of any securities
exchange or quotation system on which its shares are listed. Seller shall give
Buyer advance notice of any such press releases.
12.8 Notices. All notices, demands and other communications
made hereunder shall be in writing and shall be given either by personal
delivery, by nationally recognized overnight courier (with charges prepaid) or
by telecopy (with telephone confirmation), and shall be deemed to have been
given or made when personally delivered, the day following the date deposited
with such overnight courier service or when transmitted to telecopy machine and
confirmed by telephone, addressed to the respective parties at the following
addresses (or such other address for a party as shall be specified by like
notice):
If to the Seller:
Transit Group, Inc.
2859 Paces Ferry Road, Suite 1740
Atlanta, Georgia 30339
Attention: Wayne N. Nellums, Executive Vice President
Telephone: (770) 444-0240
Telecopy: (770) 444-0246
With a copy (which shall not constitute notice) to:
Womble Carlyle Sandridge & Rice, PLLC
1275 Peachtree Street, N.E.
Suite 700
Atlanta, Georgia 30309-3574
Attention: G. Donald Johnson, Esq.
Telephone: (404) 888-7456
Telecopy: (404) 888-7490
16
<PAGE>
If to Buyer:
General Parcel Corporation
8923 Western Way, Suite 22
Jacksonville, Florida 32256
Attention: Paul K. Saffell, President
Telephone: (904) 363-0089
Telecopy: (904) 363-8866
With a copy (which shall not constitute notice) to:
LeBoeuf, Lamb, Greene & MacRae L.L.P.
50 North Laura Street, Suite 2800
Jacksonville, Florida 32202
Attention: Michael B. Kirwan, Esq.
Telephone: (904) 630-5306
Telecopy: (904) 353-1673
12.9 Governing Law. This agreement shall be governed by the
laws of the State of Florida applicable to agreements made and to be performed
entirely within such state.
12.10 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.11 Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned by any of the parties
hereto without the prior written consent of all other parties hereto, and any
purported assignment without such consent shall be void.
12.12 Third Party Beneficiaries. None of the provisions of
this Agreement or any document contemplated hereby is intended to grant any
right or benefit to any person or entity which is not a party to this Agreement.
12.13 Headings. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of this
Agreement and shall not in any way affect the meaning or interpretation of this
Agreement.
12.14 Amendments. Any waiver, amendment, modification or
supplement of or to any term or condition of this Agreement shall be effective
only if in writing and signed by all parties hereto, and the parties hereto
waive the right to amend the provisions of this Section orally.
17
<PAGE>
12.15 Knowledge. Whenever used herein with respect to a party,
the term "knowledge" or "best knowledge" shall mean actual knowledge, without
independent investigation, of such party's officers and directors.
12.16 Severability. In the event that any provision in this
Agreement shall be determined to be invalid, illegal or unenforceable in any
respect, the remaining provisions of this Agreement shall not be in any way
impaired, and the illegal, invalid or unenforceable provision shall be fully
severed from this Agreement and there shall be automatically added in lieu
thereof a provision as similar in terms and intent to such severed provision as
may be legal, valid and enforceable.
12.17 Entire Agreement. This Agreement and the Schedules and
Exhibits hereto constitute the entire contract between the parties hereto
pertaining to the subject matter hereof, and supersede all prior and
contemporaneous agreements and understandings between the parties with respect
to such subject matter including, without limitation, the Letter Agreement dated
September 29, 1997 by and between Seller and T. Wayne Davis, which is hereby
expressly terminated.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed by its duly authorized officer as of the date first above
written.
TRANSIT GROUP, INC.
By:/s/ Wayne N. Nellums
Wayne N. Nellums, Executive Vice President
GENERAL PARCEL CORPORATION
By:/s/ T. Wayne Davis
Name: T. Wayne Davis
Title: Chairman
18
EXHIBIT 99
TRANSIT GROUP COMPLETES ACQUISITION OF RAINBOW
TRUCKING, THE COMPANY'S FIFTH TRANSACTION IN A
SIX-MONTH PERIOD
December 30, 1997 4:54 EST
ATLANTA--(BUSINESS WIRE)--Dec. 30, 1997--Transit Group, Inc. (Nasdaq Small Cap:
TRGP) today announced that it has completed the previously announced acquisition
of Rainbow Trucking, a privately held full load, long haul trucking company and
two affiliate companies based in Louisville, Kentucky. Under the terms of the
definitive agreements, Transit Group has issued 679,246 new shares of the
Company's common stock to the sellers, representing a total value of
approximately $4.5 million. Transit Group currently has approximately 19 million
common shares outstanding.
Commenting on the announcement, Philip A. Belyew, President and Chief Executive
Officer of the Company, said "This acquisition represents an important step for
Transit Group for several reasons. As the fifth acquisition we have completed
this year, it increases our already strong position in the truckload industry,
increasing our annual revenue base by more than 10% and enhancing our future
profitability. It also is a milestone event for us in that Rainbow is our first
"tuck in" transaction - a follow-on acquisition in a particular market that
allows us to consolidate our operations there to create synergies and operating
efficiencies." Belyew noted that Transit Group acquired Louisville,
Kentucky-based Capital Warehouse, Inc. in August 1997.
"As we look ahead to the coming year, we believe market forces will continue to
accelerate consolidation in the truckload transportation industry," Belyew
added. "Against this backdrop, we plan additional acquisitions in the first
quarter of 1998."
Rainbow Trucking currently operates a fleet of 83 power units, including 10
owner/operated tractors, as well as 167 trailers, in the Southeastern and
Southwestern regions of the country. The company serves customers in the
plastics, textiles, electronics, paper and retail industries.
Its 1997 revenues are expected to approach $12.5 million.
Comments in this new 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, headquartered in Atlanta, Georgia, is a holding company in the
business of acquiring and consolidating short- and long-haul trucking companies,
particularly truckload carriers based in the southeastern United States.
Trucking companies that operate as parts of Transit Group are located in
Alabama, Florida, Kentucky and North Carolina, and comprise a fleet of almost
500 trucks and 1,200 trailers, serving customers nationwide.
