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): May 13, 1999
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TRANSIT GROUP, INC.
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(Exact name of Registrant as specified in its charter)
Florida 000-18601 59-2576629
- ---------------------------- ------------------- -------------
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation or organization) Identification No.)
2859 Paces Ferry Road
Suite 1740
Atlanta, Georgia 30339
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(Address of principal executive offices, including zip code)
(770) 444-0240
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(Registrant's telephone number, including area code)
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(Former name or Former Address if
Changed Since Last Report)
<PAGE>
ITEM 5. OTHER EVENTS
On May 13, 1999, Transit Group, Inc.("TGI"), and GE Capital Equity
Investments, Inc. ("GE Equity"), entered into a Purchase Agreement, pursuant to
which: (a) TGI issued and sold to GE Equity 5,000,000 shares of TGI's Series A
convertible preferred stock; and (b) GE Equity purchased such Series A
convertible preferred stock from TGI for $25 million in cash.
TGI is a holding company acquiring, consolidating and operating short
and long haul trucking companies. GE Equity, a subsidiary of GE Capital, is the
private equity arm of General Electric Co.
ITEM 6. EXHIBITS
Exhibits
3.1 Amendment to Amended and Restated Articles of Incorporation.
3.2 Certificate of Designation, Preferences and Relative, Participating,
Optional and Other Special Rights of Preferred Stock and
Qualifications, Limitations and Restrictions Thereof
10.1 Purchase Agreement dated May 13, 1999 by and between Transit Group,
Inc. and GE Capital Equity Investments, Inc.
10.2 Stockholders' Agreement
10.3 Registration Rights Agreement
99.1 Press Release
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
TRANSIT GROUP, INC.
Date: May 13, 1999 /s/ Philip A. Belyew
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Philip A. Belyew,
President and Chief
Executive Officer
Exhibit 3.1
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
TRANSIT GROUP, INC.
Pursuant to the provisions of section 607.0602, Florida Statutes, this Florida
profit corporation adopts the following articles of amendment to its articles
of incorporation:
FIRST: Amendment(s) adopted:
THE TERMS, PREFERENCES, RIGHTS AND LIMITATIONS OF SERIES A CONVERTIBLE
PREFERRED STOCK OF TRANSIT GROUP, INC. AS ATTACHED HERETO.
SECOND: If an amendment provides for an exchange, reclassification or
cancellation of issued shares, provisions for implementing the amendment if not
contained in the amendment itself, are as follows:
N/A
THIRD: The date of each amendment's adoption: May 13, 1999
FOURTH: Adoption of Amendment(s)
The amendment(s) was/were duly adopted by the board of
directors without shareholder action and shareholder action
was not required.
Signed this 13th day of May, 1999.
Signature: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: Director
Exhibit 3.2
TRANSIT GROUP, INC.
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS THEREOF
------------------------
Pursuant to Section 607.1004 of the
Florida Business Corporation Act
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TRANSIT GROUP, INC. (the "Company"), a corporation organized
and existing under the laws of the State of Florida, hereby certifies that
pursuant to the provisions of Section 607.1004 of the Florida Business
Corporation Act, its Board of Directors, by unanimous written consent, dated
May 13, 1999 adopted the following resolution, which resolution remains in full
force and effect as of the date hereof:
WHEREAS, the Board of Directors of the Company is authorized,
within the limitations and restrictions stated in the articles of
incorporation, to fix by resolution or resolutions the designation of preferred
stock and the powers, preferences and relative participating, optional or other
special rights and qualifications, limitations or restrictions thereof,
including, without limiting the generality of the foregoing, such provisions as
may be desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion or exchange, and such other subjects or
matters as may be fixed by resolution or resolutions of the Board of Directors
under the Florida Business Corporation Act; and
WHEREAS, it is the desire of the Board of Directors of the
Company, pursuant to its authority as aforesaid, to authorize and fix the terms
of the preferred stock to be designated the Series A Convertible Preferred
Stock of the Company and the number of shares constituting such preferred
stock;
NOW, THEREFORE, BE IT RESOLVED, that there is hereby
authorized the Series A Convertible Preferred Stock on the terms and with the
provisions herein set forth:
<PAGE>
TERMS, PREFERENCES, RIGHTS AND LIMITATIONS
of
SERIES A CONVERTIBLE PREFERRED STOCK
of
TRANSIT GROUP, INC.
The relative rights, preferences, powers, qualifications,
limitations and restrictions granted to or imposed upon the Series A
Convertible Preferred Stock or the holders thereof are as follows:
1. Definitions. For purposes of this Designation, the following
definitions shall apply:
"Board" shall mean the Board of Directors of the Company.
"Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
"Common Stock" shall mean the Common Stock, $.01 par value
per share, of the Company.
"Company" shall mean Transit Group, Inc., a Florida
corporation.
"Conversion Price" shall mean the amount computed by dividing
the Liquidation Preference by the Conversion Ratio.
"Conversion Ratio" has the meaning set forth in Section 7
hereof.
"Convertible Preferred Stock" shall refer to shares of Series
A Convertible Preferred Stock, no par value per share, of the Company.
"Current Market Price," when used with reference to shares of
Common Stock or other securities on any date, shall mean the average of the
daily market prices for the 10 consecutive Trading Days immediately prior to
such date. The daily market price for each such Trading Day shall be (i) the
last sale price on such day on the principal stock exchange or NASDAQ Stock
Market on which such Common Stock is then listed or admitted to trading, (ii)
if no sale takes place on such day on any such exchange or market, the average
of the last reported closing bid and asked prices on such day as officially
quoted on any such exchange or market, (iii) if the Common Stock is not then
listed or admitted to trading on any stock exchange or such market, the average
of the last reported closing bid and asked prices on such day in the
over-the-counter market, as furnished by NASDAQ or the National Quotation
Bureau, Inc., (iv) if neither such corporation at the time is engaged in the
business of reporting such prices, as furnished by any similar firm then
engaged in such business, or (v) if there is no such firm, as furnished by any
member of the National Association of Securities Dealers ("NASD") selected
mutually by the Required Holders and Company or, if they cannot agree upon such
selection, as selected by two such members of the NASD, one of which shall be
selected by the Required Holders and one of which shall be selected by Company.
"Dividend Rate" shall mean 9% per annum.
"Event of Default" shall have the meaning assigned to it in
the Purchase Agreement and shall also mean the failure of the Company to pay in
full any quarterly dividend on the Convertible Preferred Stock or to redeem
shares of Convertible Stock pursuant to Section 6 hereof.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar Federal statute, and the rules and regulations
of the Securities and Exchange Commission thereunder, all as the same shall be
in effect at the time. Reference to a particular section of the Securities
Exchange Act of 1934, as amended, shall include reference to the comparable
section, if any, of any such similar Federal statute.
"Fair Market Value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's-length transaction, with neither
being under any compulsion to buy or sell.
"Fully Diluted Outstanding" shall mean, with reference to
Common Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Common Stock outstanding at such date and all shares
of Common Stock issuable upon the conversion of the Convertible Preferred Stock
outstanding on such date, and other options or warrants to purchase, or
securities convertible into, shares of Common Stock outstanding on such date
which would be deemed outstanding in accordance with GAAP for purposes of
determining book value or net income per share.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time.
"Liquidation Preference" shall mean $5.00 per share.
"Organic Change" shall mean (A) any sale, lease, exchange or
other transfer of all or substantially all of the property and assets of the
Company, (B) any liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, (C) any merger or consolidation to which the Company
is a party and which the holders of the voting securities of the Company
immediately prior thereto own less than a majority of the outstanding voting
securities of the surviving entity immediately following such transaction, or
(D) any transaction following which any Person or group of Persons (as such
term is used in Section 13(d) of the Exchange Act) shall beneficially own (as
defined in Rule 13d-3 under the Exchange Act) securities of the Company
representing 50% or more of the voting securities of the Company then
outstanding. For purposes of the preceding sentence, "voting securities" shall
mean securities, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect the corporate directors (or Persons performing
similar functions).
"Original Issue Date" shall mean the date of the original
issuance of shares of Convertible Preferred Stock.
"Permitted Issuances" shall mean issuances of shares of
Common Stock (i) upon the exercise or conversion of warrants or convertible
securities of the Company outstanding on the Original Issue Date (including the
Convertible Preferred Stock), (ii) upon the exercise of employee stock options
issued with the approval of the Company's Board of Directors pursuant to
Company's current stock option plans, or (iii) as consideration in connection
with Permitted Acquisitions (as such term is defined in the Purchase Agreement)
at a price (or deemed price) per share equal to or greater than the lower of
(x) the Current Market Price per share of Common Stock (calculated as of the
date on which such price per share is agreed upon whether upon the signing of a
letter of intent, if so provided therein, or the signing of a definitive
purchase agreement) and (y) the Conversion Price.
"Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
"Purchase Agreement" shall mean the Purchase Agreement, dated
as of May 13, 1999, by and between the Company and Purchaser named therein, as
it may be amended from time to time, a copy of which is on file at the
principal office of the Company.
"Redemption Date" shall mean the date on which any shares of
Convertible Preferred Stock are redeemed by the Company.
"Redemption Price" has the meaning set forth in Section 6(a)
(i) of this Certificate of Designation.
"Required Holders" shall mean the holders of at least a
majority of the outstanding shares of Convertible Preferred Stock.
"Subsidiary" of any Person means any corporation or other
entity of which a majority of the voting power or the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
"Trading Day" shall mean a Business Day or, if the Common
Stock is listed or admitted to trading on any national securities exchange or
NASDAQ market, a day on which such exchange or market is open for the
transaction of business.
2. Designation: Number of Shares. The designation of the preferred stock
authorized by this resolution shall be "Series A Convertible Preferred Stock"
and the number of shares of Convertible Preferred Stock authorized hereby shall
be 5,000,000 shares.
3. Dividends.
(a) So long as any shares of Convertible Preferred Stock shall be outstanding,
the holders of such Convertible Preferred Stock shall be entitled to receive
out of any funds legally available therefor, when, as and if declared by the
Board of Directors of the Company, preferential dividends in cash at the
Dividend Rate on the Liquidation Preference hereunder, payable quarterly in
arrears on the first Business Day of each calendar quarter. Such dividends
shall be cumulative and begin to accrue from the Original Issue Date, whether
or not declared and whether or not there shall be net profits or net assets of
the Company legally available for the payment of those dividends.
(b) So long as any shares of Convertible Preferred Stock shall be outstanding,
(i) no dividend whatsoever shall be paid or declared, and no distribution shall
be made, on account of any Common Stock, and (ii) no shares of Common Stock
shall be purchased, redeemed or acquired by the Company and no funds shall be
paid into or set aside or made available for a sinking fund for the purchase,
redemption or acquisition thereof, other than redemptions of shares of Common
Stock pursuant to contractual obligations in existence on the Original Issue
Date.
4. Liquidation Rights of Convertible Preferred Stock.
(a) In the event of any liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, the holders of Convertible Preferred Stock
then outstanding shall be entitled to be paid out of the assets of the Company
available for distribution to its stockholders, whether such assets are
capital, surplus or earnings, before any payment or declaration and setting
apart for payment of any amount shall be made in respect of any shares of
Common Stock or any share of any other class or series of the Company's
preferred stock ranking junior to the Convertible Preferred Stock with respect
to the payment of dividends or distribution of assets on liquidation,
dissolution or winding up of the Company, an amount equal to the Liquidation
Preference plus all declared or accrued and unpaid dividends in respect of any
liquidation, dissolution or winding up consummated.
(b) If upon any liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, the assets to be distributed among the holders of
Convertible Preferred Stock shall be insufficient to permit the payment to such
stockholders of the full preferential amounts aforesaid, then the entire assets
of the Company to be distributed shall be distributed ratably among the holders
of Convertible Preferred Stock, based on the full preferential amounts for the
number of shares of Convertible Preferred Stock held by each holder. (c) After
payment to the holders of Convertible Preferred Stock of the amounts set forth
in Section 4(a) hereof, the entire remaining assets and funds of the Company
legally available for distribution, if any, shall be distributed among the
holders of any Company stock entitled to a preference over the Common Stock in
accordance with the terms thereof and, thereafter, to the holders of Common
Stock, in which distribution the holders of Convertible Preferred Stock shall
participate on an as if converted basis.
If there is an Organic Change of the type referred to in
clauses (a) or (c) of the definition of Organic Change, then such transaction
shall be deemed a liquidation for purposes of distributions to stockholders of
the consideration received in such transaction, subject, however, to the
provisions of Section 5(b)(iii) hereof; provided, however, that solely for the
purposes of this Section 4(d), an Organic Change of the type referred to in
such clause (c) shall not be deemed a liquidation for purposes of this Section
4(d) if, immediately after consummation of the Organic Change, the stockholders
of Company (as determined immediately prior to such Organic Change) own at
least 35% of the voting capital stock of the surviving entity.
5. Voting Rights. In addition to any voting rights provided by law, the holders
of shares of Convertible Preferred Stock shall have the following voting
rights:
(a) So long as any of the Convertible Preferred Stock is outstanding, each
share of Convertible Preferred Stock shall entitle the holder thereof to vote
on all matters voted on by the holders of Common Stock, voting together as a
single and not separate class with other shares entitled to vote at all
meetings of the stockholders of the Company. With respect to any such vote,
each share of Convertible Preferred Stock shall entitle the holder thereof to
cast the number of votes equal to the number of votes which could be cast in
such vote by a holder of the number of shares of Common Stock of the Company
into which such share of Convertible Preferred Stock is convertible on the
record date for such vote.
(b) The affirmative vote of the Required Holders, voting together as a class,
in person or by proxy, at a special or annual meeting of stockholders called
for the purpose, or pursuant to a written consent of stockholders shall be
necessary to (i) authorize, adopt or approve an amendment to the articles of
incorporation of the Company which would alter or change in any manner the
terms, powers, preferences or special rights of the shares of Convertible
Preferred Stock or grant waivers thereof, or which would otherwise adversely
affect the rights of the Convertible Preferred Stock, provided that no such
modification or amendment may, without the consent of each holder of
Convertible Preferred Stock affected thereby, (A) change the redemption date of
the Convertible Preferred Stock; (B) raise the Conversion Price or reduce the
Liquidation Preference, Dividend Rate or Redemption Price of the Convertible
Preferred Stock; (C) adversely affect any of the conversion features of the
Convertible Preferred Stock set forth in Section 7 hereof; or (D) reduce the
percentage of outstanding Convertible Preferred Stock necessary to modify or
amend the terms thereof or to grant waivers thereof;
(ii) issue any shares of the capital stock of the Company ranking senior to, or
pari passu with (either as to dividends or upon voluntary or involuntary
liquidation, dissolution or winding up) the Convertible Preferred Stock, or
issue any securities convertible into or exchangeable for such shares, except
shares of Common Stock; or (iii) take any action which is in violation of
Article V of the Purchase Agreement. (c) If, on any date, an Event of Default
shall have occurred and be continuing, whether or not by reason of the absence
of legally available funds therefor, then the holders of shares of Convertible
Preferred Stock shall have, in addition to their other voting rights set forth
herein, the exclusive right, voting separately as a single class, to elect two
directors of the Company in accordance with this Section 5.
(d) (i) The foregoing rights of holders of shares of Convertible Preferred
Stock to take any actions as provided in this Section 5 may be exercised at any
annual meeting of stockholders or at a special meeting of stockholders held for
such purpose as hereinafter provided or at any adjournment thereof or pursuant
to any written consent of stockholders. (ii) If the holders of the Convertible
Preferred Stock have the right to elect two directors pursuant to Section 5(c)
above, a proper officer of the Company, upon the written request of the holders
of record of at least ten percent (10%) of the shares of Convertible Preferred
Stock then outstanding, addressed to the Secretary of the Company, shall call a
special meeting in lieu of the annual meeting of stockholders or a special
meeting of the holders of Convertible Preferred Stock, for the purpose of
electing directors. Any such meeting shall be held at the earliest practicable
date at the place for the holding of the annual meetings of stockholders. If
such meeting shall not be called by the proper officer of the Company within
twenty (20) days after personal service of said written request upon the
Secretary of the Company, or within twenty (20) days after mailing the same
within the United States by certified mail, addressed to the Secretary of the
Company at its principal executive offices, then the holders of record of at
least ten percent (10%) of the outstanding shares of Convertible Preferred
Stock may designate in writing one of their number to call such meeting at the
expense of the Company, and such meeting may be called by the person so
designated upon the notice required for the annual meetings of stockholders of
the Company and shall be held at the place for holding the annual meetings of
stockholders. Any holder of Convertible Preferred Stock so designated shall
have access to the lists of stockholders to be called pursuant to the
provisions hereof.
(e) Any vacancy occurring in the office of director to be elected by the
holders of Convertible Preferred Stock pursuant to Section 5(d) above may be
filled by the remaining director elected by the holders of Convertible
Preferred Stock unless and until such vacancy shall be filled by the holders of
Convertible Preferred Stock. The term of office of the directors elected by the
holders of Convertible Preferred Stock shall terminate upon the election of
their successors at any meeting of stockholders held for the purpose of
electing directors or, if earlier, when an Event of Default is no longer
continuing.
(f) The directors elected by the holders of shares of Convertible Preferred
Stock voting separately as a single class may be removed from office with or
without cause by the vote of the holders of at least a majority of the
outstanding shares of Convertible Preferred Stock. A special meeting of the
holders of shares of Convertible Preferred Stock may be called in accordance
with the procedures set forth in subparagraph (d) of this Section 5. 6.
Redemption of Convertible Preferred Stock.
(a) Upon at least thirty (30) Business Days prior written notice to the Company
by any of the holders of the Convertible Preferred Stock (the "Redemption
Notice"), which written notice may not be sent for a redemption prior to the
third anniversary of the Original Issue Date, the Company shall redeem, at the
redemption price equal to the sum of the Liquidation Preference per share plus
an amount equal to all accrued and unpaid dividends per share (the "Redemption
Price"), the number of shares of Convertible Preferred Stock specified in such
notice, up to one-third of the shares issued on the Original Issue Date if the
Redemption Notice is given for a redemption on or after the third anniversary
of the Original Issue Date but before the fourth anniversary thereof, up to
two-thirds of such amount if given for a redemption on or after such fourth
anniversary but prior to the fifth anniversary thereof and up to all such
shares if given for a redemption on such fifth anniversary. If the Required
Holders so elect, on the fifth anniversary of the Original Issue Date or at any
time upon the occurrence of an Organic Change, the Company shall redeem all of
the outstanding shares of Convertible Preferred Stock. Such redemption rights
shall expire after such fifth anniversary date, except upon the occurrence of
an Organic Change.
(b) On or before the date fixed by the Company for redemption (the "Redemption
Date"), which shall be no later than thirty (30) Business Days after the date
of the Redemption Notice, each holder of Convertible Preferred Stock shall
surrender the certificate or certificates representing such shares of
Convertible Preferred Stock to the Company, duly endorsed for transfer in the
manner and at the place designated by the Company in a notice to the redeeming
holders, and thereupon the Redemption Price for such shares shall be payable in
cash on the Redemption Date to the person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be cancelled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares. (c) Unless the Company
defaults in the payment in full of the Redemption Price, dividends on the
Convertible Preferred Stock called for redemption shall cease to accumulate on
the Redemption Date, and the holders of such shares redeemed shall cease to
have any further rights with respect thereto on the Redemption Date, other than
to receive the Redemption Price without interest. (d) If, at the time of any
redemption pursuant to this Section 6, the funds of the Company legally
available for redemption of Convertible Preferred Stock are insufficient to
redeem the number of shares required to be redeemed, those funds which are
legally available shall be used to redeem the maximum possible number of such
shares, pro rata based upon the number of shares to be redeemed. At any time
thereafter when additional funds of the Company become legally available for
the redemption of Convertible Preferred Stock, such funds shall immediately be
used to redeem the balance of the shares of Convertible Preferred Stock which
the Company has become obligated to redeem pursuant to this subparagraph, but
which it has not redeemed. (e) The Company may not otherwise redeem or
repurchase the Convertible Preferred Stock. 7. Conversion. (a) Subject to the
provisions for adjustment hereinafter set forth, each share of Convertible
Preferred Stock shall be convertible at any time and from time to time, at the
option of the holder thereof (such conversion, an "Optional Conversion") into
fully paid and nonassessable shares of Common Stock. The number of shares of
Common Stock deliverable upon conversion of a share of Convertible Preferred
Stock, adjusted as hereinafter provided, is referred to herein as the
"Conversion Ratio." The Conversion Ratio shall initially be one (1), subject to
adjustment from time to time pursuant to paragraph (f) of this Section 7. No
fractional shares shall be issued upon the conversion of any shares of
Convertible Preferred Stock. All shares of Common Stock (including fractions
thereof) issuable upon conversion of more than one share of Convertible
Preferred Stock by a holder thereof shall be aggregated for purposes of
determining whether conversion would result in the issuance of any fractional
share. If, after the aforementioned aggregation, the conversion would result in
the issuance of a fraction of a share of Common Stock, the Company shall, in
lieu of issuing any fractional share, pay the holder otherwise entitled to such
fraction a sum in cash equal to the Current Market Price of such fraction on
the date of conversion.
(b) (i) An Optional Conversion of the Convertible Preferred Stock may be
effected by any such holder upon the surrender to the Company at the principal
office of the Company of the certificate for such Convertible Preferred Stock
to be converted accompanied by a written notice stating that such holder elects
to convert all or a specified number of such shares (which may be fractional
shares) in accordance with the provisions of this Section 7 and specifying the
name or names in which such holder wishes the certificate or certificates for
shares of Common Stock to be issued. Upon an Optional Conversion of any shares
of Convertible Preferred Stock, the Company shall pay the holder thereof all
accrued and unpaid dividends owing in respect of such shares so converted,
which dividends shall be paid as soon as practicable, but in no event more than
30 days after receipt by the Company of the conversion notice.
(ii) In case the written notice specifying the name or name in which such
holder wishes the certificate or certificates for shares of Common Stock to be
issued shall specify a name or names other than that of such holder, such
notice shall be accompanied by payment of all transfer taxes payable upon the
issuance of shares of Common Stock in such name or names. Other than such
taxes, the Company will pay any and all issue and other taxes (other than taxes
based on income) that may be payable in respect of any issue or delivery of
shares of Common Stock on conversion of Convertible Preferred Stock pursuant
hereto. As promptly as practicable, and in any event within five Business Days
after the surrender of such certificate or certificates and the receipt of such
notice relating thereto and, if applicable, payment of all transfer taxes (or
the demonstration to the satisfaction of the Company that such taxes have been
paid), the Company shall deliver or cause to be delivered (i) certificates
representing the number of validly issued, fully paid and nonassessable full
shares of Common Stock to which the holder of shares of Convertible Preferred
Stock being converted shall be entitled and (ii) if less than the full number
of shares of Convertible Preferred Stock evidenced by the surrendered
certificate or certificates is being converted, a new certificate or
certificates, of like tenor, for the number of shares evidenced by such
surrendered certificate or certificates less the number of shares being
converted.
(iii) In the case of an Optional Conversion, such conversion shall be deemed to
have been made at the close of business on the date of giving the written
notice referred to in the first sentence of (b)(i) above and of such surrender
of the certificate or certificates representing the shares of Convertible
Preferred Stock to be converted so that the rights of the holder thereof as to
the shares being converted shall cease except for the right to receive shares
of Common Stock in accordance herewith, and the person entitled to receive the
shares of Common Stock shall be treated for all purposes as having become the
record holder of such shares of Common Stock at such time. (c) In case any
shares of Convertible Preferred Stock are to be redeemed pursuant to Section 6,
all rights of conversion shall cease and terminate as to the shares of
Convertible Preferred Stock to be redeemed at the close of business on the
Business Day next preceding the date fixed for redemption unless the Company
shall default in the payment of the Redemption Price.
(d) The Conversion Ratio shall be subject to adjustment from time to time in
certain instances as hereinafter provided. (e) The Company shall at all times
reserve, and keep available for issuance upon the conversion of the Convertible
Preferred Stock, such number of its authorized but unissued shares of Common
Stock as will from time to time be sufficient to permit the conversion of all
outstanding shares of Convertible Preferred Stock, and shall take all action
required to increase the authorized number of shares of Common Stock if
necessary to permit the conversion of all outstanding shares of Convertible
Preferred Stock. (f) The Conversion Ratio will be subject to adjustment from
time to time as follows: (i) In case the Company shall at any time or from time
to time after the Original Issue Date (A) pay a dividend, or make a
distribution, on the outstanding shares of Common Stock in shares of Common
Stock, (B) subdivide the outstanding shares of Common Stock, (C) combine the
outstanding shares of Common Stock into a smaller number of shares or (D) issue
by reclassification of the shares of Common Stock any shares of capital stock
of the Company, then, and in each such case, the Conversion Ratio in effect
immediately prior to such event or the record date therefor, whichever is
earlier, shall be adjusted so that the holder of any shares of Convertible
Preferred Stock thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock or other securities of the Company
which such holder would have owned or have been entitled to receive after the
happening of any of the events described above, had such shares of Convertible
Preferred Stock been surrendered for conversion immediately prior to the
happening of such event or the record date therefor, whichever is earlier. An
adjustment made pursuant to this clause (i) shall become effective (x) in the
case of any such dividend or distribution, immediately after the close of
business on the record date for the determination of holders of shares of
Common Stock entitled to receive such dividend or distribution, or (y) in the
case of such subdivision, reclassification or combination, at the close of
business on the day upon which such corporate action becomes effective. No
adjustment shall be made pursuant to this clause (i) in connection with any
transaction to which paragraph (g) applies.
(ii) In case the Company shall issue shares of Common Stock (or rights,
warrants or other securities convertible into or exchangeable for shares of
Common Stock) after the Original Issue Date, other than issuances covered by
clause (i) above and Permitted Issuances, at a price per share (or having an
exercise, conversion or exchange price per share) less than the Current Market
Price per share of Common Stock as of the date of issuance of such shares or of
such rights, warrants or other convertible or exchangeable securities, then,
and in each such case, the Conversion Ratio shall be adjusted upward (but not
downward) so that the holder of each share of Convertible Preferred Stock shall
be entitled to receive, upon the conversion thereof, the number of shares of
Common Stock determined by multiplying (A) the applicable Conversion Ratio on
the day immediately prior to such date by (B) a fraction, the numerator of
which shall be the sum of (1) the number of shares of Common Stock outstanding
on such date and (2) the number of additional shares of Common Stock issued (or
into which the rights, warrants or other convertible or exchangeable securities
may exercise or convert), and the denominator of which shall be the sum of (x)
the number of shares of Common Stock outstanding on such date and (y) the
number of shares of Common Stock which the aggregate consideration received by
the Company for the total number of shares of Common Stock so issued (or into
which the rights, warrants or other exchangeable or convertible securities may
convert) would purchase at such Current Market Price on such date. (iii) In
case the Company shall issue shares of Common Stock (or rights, warrants or
other securities convertible into or exchangeable for shares of Common Stock)
after the Original Issue Date, other than issuances covered by clause (i) above
and Permitted Issuances, at a price per share (or having an exercise,
conversion or exchange price per share) less than the Conversion Price as of
the date of issuance of such shares or of such rights, warrants or other
convertible or exchangeable securities, then, and in each such case, the
Conversion Price shall be reduced (but not increased) to a price determined by
dividing (A) an amount equal to the sum of (x) the number of shares of Common
Stock outstanding immediately prior to such issue multiplied by the then
existing Conversion Price, plus (y) the consideration, if any, received by
Company upon such issue, by (B) the total number of shares of Common Stock
outstanding immediately after such issue or sale. The Conversion Ratio shall be
adjusted to equal the Liquidation Preference divided by the Conversion Price.
For the purpose of determining the consideration received by the Company upon
any such issue pursuant to clause (y) above, if the consideration received by
the Company is other than cash, its value will be deemed its Fair Market Value,
as determined in good faith by the Board of Directors of the Company. (iv) An
adjustment made pursuant to clauses (ii) or (iii) above shall be made on the
next Business Day following the date on which any such issuance is made and
shall be effective retroactively immediately after the close of business on
such date. For purposes of clauses (ii) and (iii), the aggregate consideration
received by the Company in connection with the issuance of shares of Common
Stock or of rights, warrants or other securities exchangeable or convertible
into shares of Common Stock shall be deemed to be equal to the sum of the
aggregate offering price of all such Common Stock and such rights, warrants, or
other exchangeable or convertible securities plus the minimum aggregate amount,
if any, receivable upon exchange or conversion of any such exchangeable or
convertible securities into shares of Common Stock. If both clauses (ii) and
(iii) are applicable, the adjustment which results in the higher Conversion
Ratio shall be used. (v) In case the Company shall at any time or from time to
time after the Original Issue Date declare, order, pay or make a dividend or
other distribution (including, without limitation, any distribution of stock or
other securities or property or rights or warrants to subscribe for securities
of the Company or any of its Subsidiaries by way of dividend or spinoff), on
its Common Stock, other than dividends or distributions of shares of Common
Stock which are referred to in clause (i) of this paragraph (f), then, and in
each such case, the Conversion Ratio shall be adjusted so that the holder of
each share of Convertible Preferred Stock shall be entitled to receive, upon
the conversion thereof, the number of shares of Common Stock determined by
multiplying (1) the applicable Conversion Ratio on the day immediately prior to
the record date fixed for the determination of stockholders entitled to receive
such dividend or distribution by (2) a fraction, the numerator of which shall
be the Current Market Price per share of Common Stock at such record date, and
the denominator of which shall be such Current Market Price per share of Common
Stock less the Fair Market Value of such dividend or distribution per share of
Common Stock. No adjustment shall be made pursuant to this clause (v) in
connection with any transaction to which paragraph (g) applies. (vi) For
purposes of this paragraph (f), the number of shares of Common Stock at any
time outstanding shall not include any shares of Common Stock then owned or
held by or for the account of the Company or any of its subsidiaries. (vii) If
the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend or other distribution, and
shall thereafter and before the distribution to stockholders thereof legally
abandon its plan to pay or deliver such dividend or distribution, then
thereafter no adjustment in the number of shares of Common Stock issuable upon
exercise of the right of conversion granted by this paragraph (f) or in the
Conversion Ratio then in effect shall be required by reason of the taking of
such record. (viii) Anything in this paragraph (f) to the contrary
notwithstanding, the Company shall not be required to give effect to any
adjustment in the Conversion Ratio unless and until the net effect of one or
more adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change of the Conversion Ratio by at least
one-tenth of one share of Common Stock, and when the cumulative net effect of
more than one adjustment so determined shall be to change the Conversion Ratio
by at least one-tenth of one share of Common Stock, such change in Conversion
Ratio shall thereupon be given effect. (ix) If any option or warrant expires or
is cancelled without having been exercised, then, for the purposes of the
adjustments set forth above, such option or warrant shall have been deemed not
to have been issued and the Conversion Ratio shall be adjusted accordingly. No
holder of Common Stock which was previously issued upon conversion of
Convertible Preferred Stock shall have any obligation to redeem or cancel any
such shares of Common Stock as a result of the operation of this paragraph
(ix). (g) In case of any Organic Change (or any other merger or consolidation
to which the Company is a party, which for purposes of this paragraph (g) shall
be deemed an Organic Change), each share of Convertible Preferred Stock then
outstanding, other than those shares to be redeemed pursuant to Section 6
hereof, shall thereafter be convertible into, in lieu of the Common Stock
issuable upon such conversion prior to consummation of such Organic Change, the
kind and amount of shares of stock and other securities and property receivable
(including cash) upon the consummation of such Organic Change by a holder of
that number of shares of Common Stock into which one share of Convertible
Preferred Stock was convertible immediately prior to such Organic Change
(including, on a pro rata basis, the cash, securities or property received by
holders of Common Stock in any tender or exchange offer that is a step in such
Organic Change). In case securities or property other than Common Stock shall
be issuable or deliverable upon conversion as aforesaid, then all references in
this Section 7 shall be deemed to apply, so far as appropriate and nearly as
may be, to such other securities or property.
(h) In case at any time or from time to time the Company shall pay any stock
dividend or make any other non-cash distribution to the holders of its Common
Stock, or shall offer for subscription pro rata to the holders of its Common
Stock any additional shares of stock of any class or any other right, or there
shall be any capital reorganization or reclassification of the Common Stock of
the Company or consolidation or merger of the Company with or into another
corporation, or any sale or conveyance to another corporation of the property
of the Company as an entirety or substantially as an entirety, or there shall
be a voluntary or involuntary dissolution, liquidation or winding up of the
Company, then, in any one or more of said cases, the Company shall give at
least 20 days' prior written notice to the registered holders of the
Convertible Preferred Stock at the addresses of each as shown on the books of
the Company as of the date on which (i) the books of the Company shall close or
a record shall be taken for such stock dividend, distribution or subscription
rights or (ii) such reorganization, reclassification, consolidation, merger,
sale or conveyance, dissolution, liquidation or winding up shall take place, as
the case may be, provided that in the case of any Organic Change to which
paragraph (g) applies the Company shall give at least 30 days' prior written
notice as aforesaid. Such notice shall also specify the date as of which the
holders of the Common Stock of record shall participate in said dividend,
distribution or subscription rights or shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale or conveyance or
participate in such dissolution, liquidation or winding up, as the case may be.
Failure to give such notice shall not invalidate any action so taken. 8.
Reports as to Adjustments. Upon any adjustment of the Conversion Ratio then in
effect and any increase or decrease in the number of shares of Common Stock
issuable upon the operation of the conversion set forth in Section 7, then, and
in each such case, the Company shall promptly deliver to each holder of the
Convertible Preferred Stock, a certificate signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Company setting forth in reasonable detail the event
requiring the adjustment and the method by which such adjustment was calculated
and specifying the Conversion Ratio then in effect following such adjustment
and the increased or decreased number of shares issuable upon the conversion
granted by Section 7, and shall set forth in reasonable detail the method of
calculation of each and a brief statement of the facts requiring such
adjustment. Where appropriate, such notice to holders of the Convertible
Preferred Stock may be given in advance.
9. Certain Covenants. Any registered holder of Convertible Preferred Stock may
proceed to protect and enforce its rights and the rights of such holders by any
available remedy by proceeding at law or in equity to protect and enforce any
such rights, whether for the specific enforcement of any provision in this
Certificate of Designation or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy. 10. No Reissuance of Preferred
Stock. No Convertible Preferred Stock acquired by the Company by reason of
redemption, purchase, or otherwise shall be reissued, and all such shares shall
be cancelled, retired and eliminated from the shares which the Company shall be
authorized to issue. 11. Notices. All notices to the Company permitted
hereunder shall be personally delivered or sent by first class mail, postage
prepaid, addressed to its principal office located at 2859 Paces Ferry Road,
Suite 1740, Atlanta, Georgia 30339, or to such other address at which its
principal office is located and as to which notice thereof is similarly given
to the holders of the Convertible Preferred Stock at their addresses appearing
on the books of the Company.
<PAGE>
IN WITNESS WHEREOF, Transit Group, Inc. has caused this
Certificate to be signed by its President and Secretary, respectively, on this
13th day of May, 1999.
_/s/ Philip A. Belyew________
President
_/s/ Wayne N. Nellums_______
Secretary
Exhibit 10.1
PURCHASE AGREEMENT
dated as of May 13, 1999
by and between
TRANSIT GROUP, INC.
and
GE CAPITAL EQUITY INVESTMENTS, INC.
<PAGE>
TABLE OF CONTENTS
PURCHASE AGREEMENT
(continued)
Page
TABLE OF CONTENTS
PURCHASE AGREEMENT
I. DEFINITIONS.........................................................1
II. THE PURCHASE OF CONVERTIBLE PREFERRED STOCK.........................8
2.1. Authorization of Issue.....................................8
2.2. Purchase of Convertible Preferred Stock....................8
2.3. Closing....................................................9
2.4. Use of Proceeds............................................9
III. PURCHASER'S REPRESENTATIONS.........................................9
3.1. Investment Intention.......................................9
3.2. Accredited Investor........................................9
3.3. Corporate Existence........................................10
3.4. Corporate Power; Authorization; Enforceable Obligations....10
3.5. Restricted Shares..........................................10
3.6. Brokers....................................................10
IV. COMPANY'S REPRESENTATIONS AND WARRANTIES............................10
4.1. Authorized and Outstanding Shares of Capital Stock.........10
4.2. Authorization and Issuance of Convertible Preferred Stock..11
4.3. Securities Laws............................................11
4.4. Corporate Existence; Compliance with Law...................11
4.5. Subsidiaries...............................................12
4.6. Corporate Power; Authorization; Enforceable Obligations....12
4.7. Financial Statements.......................................13
4.8. Ownership of Property......................................13
4.9. Material Contracts; Indebtedness...........................14
4.10. Environmental Protection...................................14
4.11. Labor Matters..............................................15
4.12. Other Ventures.............................................16
4.13. Taxes......................................................16
4.14. No Litigation..............................................17
4.15. Brokers....................................................17
4.16. Employment and Labor Agreements............................17
4.17. Patents, Trademarks, Copyrights and Licenses...............17
4.18. No Material Adverse Effect.................................17
4.19. ERISA......................................................18
4.20. Registration Rights........................................19
4.21. SEC Documents..............................................19
4.22. Ordinary Course of Business................................19
4.23. Insurance..................................................19
4.24. Minute Books...............................................20
4.25. Year 2000 Compliance.......................................20
4.26. Full Disclosure............................................20
V. COVENANTS...........................................................21
5.1. Affirmative and Financial Covenants........................21
(a) Books and Records.................................21
(b) Financial and Business Information................21
(c) Communication with Accountants....................22
(d) Tax Compliance....................................23
(e) Insurance.........................................23
(f) Employee Plans....................................23
(g) Compliance with Law...............................24
(h) Maintenance of Existence and Conduct of Business..24
(i) Access............................................24
(j) Exchange of Stock Certificates....................24
(k) Lost, Stolen, Destroyed or Mutilated Stock
Certificates.....................................25
5.2. Negative Covenants.........................................25
(a) Permitted Acquisitions or Investments.............25
(b) Sales of Assets; Liquidation......................26
(c) Agreements........................................26
(d) Employee Loans....................................26
(e) Capital Stock.....................................26
(f) Transactions with Affiliates......................26
(g) Indebtedness......................................27
(h) Restricted Payments...............................27
(i) Mergers and Subsidiaries..........................27
(j) Amendments to Articles of Incorporation and
By-Law...........................................27
5.3. Remedies for Events of Default.............................28
5.4. Certain Tax Matters........................................28
5.5. Status of Dividends........................................29
VI. CONDITIONS PRECEDENT................................................29
6.1. Purchaser Conditions Precedent.............................29
6.2. Additional Purchaser Conditions............................31
6.3. Company Conditions Precedent...............................31
VII. SECURITIES LAW MATTERS..............................................32
7.1. Legends....................................................32
VIII. SURVIVAL; INDEMNIFICATION...........................................32
8.1. Survival...................................................32
8.2. Indemnification............................................32
IX. EXPENSES............................................................33
X. MISCELLANEOUS.......................................................34
10.1. Notices....................................................34
10.2. Binding Effect; Benefits...................................35
10.3. Amendment..................................................35
10.4. Successors and Assigns; Assignability......................36
10.5. Remedies...................................................36
10.6. Section and Other Headings.................................36
10.7. Severability...............................................36
10.8. Counterparts...............................................36
10.9. Publicity..................................................36
10.10. Entire Agreement...........................................36
10.11. Governing Law; Waiver of Jury Trial........................37
<PAGE>
Schedules
Schedule 4.1 - Stock and Warrants
Schedule 4.5 - Subsidiaries
Schedule 4.6 - Consents
Schedule 4.7 - Financial Statements; Other Obligations
Schedule 4.8 - Ownership and Properties
Schedule 4.9 - Material Contracts and Indebtedness
Schedule 4.10 - Environmental Matters
Schedule 4.12 - Other Ventures
Schedule 4.13 - Taxes
Schedule 4.14 - Litigation
Schedule 4.15 - Brokers
Schedule 4.16 - Employment Contracts
Schedule 4.17 - Patents, Trademarks, Etc.
Schedule 4.19 - ERISA
Schedule 4.20 - Registration Rights
Schedule 4.22 - Insurance
Schedule 5.2(d) - Employee Loans
Schedule 5.2(f) - Transactions with Affiliates
Exhibits
Exhibit A Certificate of Designation-Convertible Preferred
Stock
Exhibit B Stockholders Agreement
Exhibit C Registration Rights Agreement
Exhibit D Opinion of Company Counsel
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of May 13, 1999, by and between
Transit Group, Inc., a Florida corporation having an office at 2859 Paces Ferry
Road, Suite 1740, Atlanta, Georgia 30339 ("Company"), and GE Capital Equity
Investments, Inc., a Delaware corporation having an office at 120 Long Ridge
Road, Stamford, Connecticut 06927 ("GE Capital" or "Purchaser").
W I T N E S S E T H :
WHEREAS, Company has agreed to issue and sell to Purchaser,
and Purchaser has agreed to purchase from Company, upon the terms and
conditions hereinafter provided, 5,000,000 shares of Company's Series A
Convertible Preferred Stock, no par value per share, the terms, preferences and
limitations of which are set forth in Exhibit A hereto (the "Convertible
Preferred Stock");
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, it is agreed as follows:
DEFINITIONS
"Affiliate" shall mean, with respect to any Person, (i) each
Person that, directly or indirectly, owns or controls, whether beneficially, or
as a trustee, guardian or other fiduciary, 5% or more of the Stock having
ordinary voting power in the election of directors of such Person, (ii) each
Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person, (iii) each of such Person's officers,
directors, joint venturers and partners, (iv) any trust or beneficiary of a
trust of which such Person is the sole trustee or (v) any lineal descendants,
ancestors, spouse or former spouses (as part of a marital dissolution) of such
Person (or any trust for the benefit of such Person). For the purpose of this
definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
"Balance Sheet" shall have the meaning set forth in Section
4.7(a) hereof.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"Capital Expenditures" shall mean all payments for any fixed
assets or improvements or for replacements, substitutions or additions thereto,
that have a useful life of more than one year and which are required to be
capitalized under GAAP.
"Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as
lessee that, in accordance with GAAP, either would be required to be classified
and accounted for as a capital lease on a balance sheet of such Person or
otherwise be disclosed as a capital lease in a note to such balance sheet,
other than, in the case of Company or a Subsidiary of Company, any such lease
under which Company or such Subsidiary is the lessor.
"Capital Lease Obligation" shall mean, with respect to any
Capital Lease, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease or otherwise be disclosed in a note to such balance
sheet.
"Cash Equivalents" shall mean (i) marketable direct
obligations issued or unconditionally guaranteed by the United States of
America or any agency thereof maturing within one year from the date of
acquisition thereof; (ii) commercial paper maturing no more than one year from
the date of creation thereof and at the time of their acquisition having the
highest rating obtainable from either Standard & Poor's Corporation or Moody's
Investors Service, Inc.; and (iii) certificates of deposit, maturing not more
than one year from the date of creation thereof, issued by commercial banks
incorporated under the laws of the United States of America, each having
combined capital, surplus and undivided profits of not less than $200,000,000
and having a rating of "A" or better by a nationally recognized rating agency.
"Certificate of Designation" shall mean the Certificate of
Designation setting forth the rights and preferences of the Convertible
Preferred Stock attached as Exhibit A hereto.
"Charges" shall mean all federal, state, county, city,
municipal, local, foreign or other governmental (including, without limitation,
PBGC) taxes at the time due and payable, levies, assessments, charges, liens,
claims or encumbrances upon or relating to (i) Company's or any of its
Subsidiaries' employees, payroll, income or gross receipts, (ii) Company's or
any of its Subsidiaries' ownership or use of any of its assets, or (iii) any
other aspect of Company's or any of the Subsidiaries' business.
"Closing" shall have the meaning set forth in Section 2.3
hereof.
"Closing Date" shall have the meaning set forth in Section
2.3 hereof.
"COBRA" shall have the meaning set forth in Section 4.19(m)
hereof.
"Common Stock" shall mean the common stock, $.01 par value
per share, of Company.
"Compensation" shall mean, with respect to any Person, all
payments and accruals commonly considered to be compensation, including,
without limitation, all wages, salary, deferred payment arrangements, bonus
payments and accruals, profit sharing arrangements, payments in respect of
stock option or phantom stock option or similar arrangements, stock
appreciation rights or similar rights, incentive payments, pension or
employment benefit contributions or similar payments, made to or accrued for
the account of such Person or otherwise for the direct or indirect benefit of
such Person.
"Convertible Preferred Stock" shall have the meaning set
forth in the recitals hereto.
"Default" shall mean any event which, with the passage of
time or notice or both, would, unless cured or waived, become an Event of
Default.
"Environmental Laws" shall mean all federal, state and local
laws, statutes, ordinances and regulations, now or hereafter in effect, and in
each case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment,
relative to the applicable Real Estate, relating to the regulation and
protection of human health, safety, the environment and natural resources
(including, without limitation, ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species and
vegetation). Environmental Laws include but are not limited to the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. ss. 9601 et seq.) ("CERCLA"); the Hazardous Material
Transportation Act, as amended (49 U.S.C. ss. 1801 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. ss. 136 et
seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. ss.
6901 et seq.) ("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C.
ss. 2601 et seq.); the Clean Air Act, as amended (42 U.S.C. ss. 740 et seq.);
the Federal Water Pollution Control Act, as amended (33 U.S.C. ss. 1251 et
seq.); the Occupational Safety and Health Act, as amended (29 U.S.C. ss. 651 et
seq.) ("OSHA"); and the Safe Drinking Water Act, as amended (42 U.S.C. ss. 300f
et seq.), and any and all regulations promulgated thereunder, and all analogous
state and local counterparts or equivalents and any transfer of ownership
notification or approval statutes.
"Environmental Liabilities and Costs" shall mean all
liabilities, obligations, responsibilities, remedial actions, losses, damages,
punitive damages, consequential damages, treble damages, costs and expenses
(including, without limitation, all fees, disbursements and expenses of
counsel, experts and consultants and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
claim, suit, action or demand by any person or entity, whether based in
contract, tort, implied or express warranty, strict liability, criminal or
civil statute or common law (including, without limitation, any thereof arising
under any Environmental Law, permit, order or agreement with any Governmental
Authority) and which relate to any health or safety condition regulated under
any Environmental Law or in connection with any other environmental matter or
Spill or the presence of a hazardous substance or threatened Spill of any
Hazardous Substance.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974 (or any successor legislation thereto), as amended from time to
time and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to Company, any
trade or business (whether or not incorporated) under common control with
Company and which, together with Company, are treated as a single employer
within the meaning of Sections 414(b), (c), (m) or (o) of the IRC, excluding
Purchaser and each other person which would not be an ERISA Affiliate if
Purchaser did not own any issued and outstanding shares of Stock of Company.
"Event of Default" shall mean the occurrence of any breach of
any representation or warranty in any material respect, or any breach of any
covenant or agreement of Company under this Agreement, which in the case of the
covenants set forth in Section 5.1 (other than Sections (f)(iii) and (iv)) of
this Agreement remain uncured for a period of twenty days after receipt by
Company of written notice thereof by the Required Holders, but only during the
continuance of such breach.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and all rules and regulations promulgated thereunder.
"Fair Market Value" shall mean the amount which a willing
buyer would pay a willing seller in an arm's-length transaction, with neither
being under any compulsion to buy or sell.
"Financials" shall mean the financial statements referred to
in Section 4.7(a) hereof.
"Fiscal Year" shall mean the twelve month period ending
December 31. Subsequent changes of the fiscal year of Company shall not change
the term "Fiscal Year," unless the Required Holders shall consent in writing to
such changes.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" shall mean, as to any Person, any
obligation of such Person guaranteeing any Indebtedness, lease, dividend, or
other obligation ("primary obligations") of any other Person, other than, with
respect to Company, a Subsidiary (the "primary obligor"), in any manner
including, without limitation, any obligation or arrangement of such Person (a)
to purchase or repurchase any such primary obligation, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, or (d) to
indemnify the owner of such primary obligation against loss in respect thereof.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indebtedness" of any Person shall mean (i) all indebtedness
of such Person for borrowed money or for the deferred purchase price of
property or services (including, without limitation, reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured, but not including obligations to trade
creditors incurred in the ordinary course of business), (ii) all obligations
evidenced by notes, bonds, debentures or similar instruments, (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreements with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property),
(iv) all Capital Lease Obligations, (v) all Guaranteed Indebtedness, (vi) all
Indebtedness referred to in clause (i), (ii), (iii), (iv) or (v) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness and (vii) all liabilities under Title IV of ERISA.
"IRC" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any
successor thereto.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or similar preferential arrangement of any kind or nature whatsoever
(including, without limitation, any title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing,
and the filing of, or agreement to give, any financing statement perfecting a
security interest as to assets owned by the relevant Person under the Uniform
Commercial Code or comparable law of any jurisdiction).
"Material Adverse Effect" shall mean material adverse effect
on the business, assets, operations, prospects or financial or other condition
of Company and its Subsidiaries, if any, taken as a whole.
"Material Contracts" means (i) all of Company's and its
Subsidiaries' contracts, agreements, leases or other instruments to which
Company or any of its Subsidiaries is a party or by which Company, its
Subsidiaries or its properties are bound, which involve payments by or to
Company or its Subsidiaries of more than $500,000 or which extend for a term of
more than a year from the date hereof, other than shipper contracts entered
into in the ordinary course of business which are terminable on not more than
90 days notice, (ii) all of Company's and its Subsidiaries' loan agreements,
bank lines of credit agreements, indentures, mortgages, deeds of trust, pledge
and security agreements, factoring agreements, conditional sales contracts,
letters of credit or other debt instruments in excess of $1,000,000, (iii) all
material operating or capital leases for equipment to which Company or any of
its Subsidiaries is a party in excess of $1,000,000, (iv) all non-competition
and similar agreements to which Company is a party, (v) all contracts for the
employment of any officer or employee of Company, (vi) any Guaranteed
Indebtedness by the Company or any of its Subsidiaries, and (vii) all other
material contracts not made in the ordinary course of business.
"Multiemployer Plan" shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which Company, any of its
Subsidiaries or any ERISA Affiliate is making, is obligated to make, has made
or been obligated to make, contributions on behalf of participants who are or
were employed by any of them.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any successor thereto.
"Pension Plan" shall have the meaning set forth in Section
4.19(a) hereof.
"Permitted Acquisitions" means any acquisition permitted
under Section 5.2 or approved by the Required Holders as provided therein.
"Permitted Indebtedness" means, with respect to Company and
its Subsidiaries, (i) taxes or assessments or other governmental charges or
levies, either not yet due and payable or to the extent that nonpayment thereof
is permitted by the terms of this Agreement; (ii) obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (iii) bids, tenders, contracts (other than contracts
for the payment of money) or leases to which Company or any of its Subsidiaries
is a party as lessee made in the ordinary course of business; (iv) public or
statutory obligations of Company or any of its Subsidiaries; (v) all deferred
taxes and (vi) all unfunded pension fund and other employee benefit plan
obligations and liabilities but only to the extent permitted to remain unfunded
under applicable law.
"Person" shall mean any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit
corporation, entity or government (whether federal, state, county, city,
municipal or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
"Plan" shall have the meaning set forth in Section 4.19(a)
hereof.
"Registration Rights Agreement" shall mean the Registration
Rights Agreement by and between Company and Purchaser, substantially in the
form attached hereto as Exhibit C, as such agreement may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"Required Holders" shall mean Persons who hold at least a
majority of the outstanding Convertible Preferred Stock.
"Restricted Payment" shall mean (i) the declaration of any
dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of Company's Stock
or (ii) any payment on account of the purchase, redemption or other retirement
of Company's Stock or any other payment or distribution made in respect of any
Stock of Company, either directly or indirectly, but shall not include the
redemption of shares of Common Stock by Company pursuant to contractual
commitments in effect on the date hereof.
"Retiree Welfare Plan" shall refer to any Welfare Plan
providing for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of
employment, other than continuation coverage provided pursuant to Section 4980B
of the IRC and at the sole expense of the participant or the beneficiary of the
participant.
"SEC" shall mean the U.S. Securities and Exchange Commission,
or any successor thereto.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and all rules and regulations promulgated thereunder.
"Spill" shall have the meaning set forth in Section 4.10.
"Stock" shall mean all shares, options, warrants, general or
limited partnership interests, limited liability company membership interest,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity
whether voting or nonvoting, including, without limitation, common stock,
preferred stock, or any other "equity security" (as such term is defined in
Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under
the Exchange Act).
"Stockholders Agreement" shall mean the Stockholders
Agreement by and among Company, Purchaser and each of the other stockholders
party thereto, substantially in the form attached hereto as Exhibit B, as such
agreement may be amended, supplemented or otherwise modified from time to time.
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person and/or one or more
Subsidiaries of such Person, and (b) any partnership or other entity in which
such Person and/or one or more Subsidiaries of such Person shall have an
interest (whether in the form of voting or participation in profits or capital
contribution) of more than 50%.
"Transaction Documents" shall mean this Agreement, the
Certificate of Designation, the Stockholders Agreement and the Registration
Rights Agreement.
"Welfare Plan" shall mean any welfare plan, as defined in
Section 3(1) of ERISA, which is maintained or contributed to by Company, any of
its Subsidiaries or any ERISA Affiliate.
"Year 2000 Compliant" shall have the meaning set forth in
Section 4.25 hereof.
References to this "Agreement" shall mean this Purchase
Agreement, including all amendments, modifications and supplements and any
exhibits or schedules to any of the foregoing, and shall refer to the Agreement
as the same may be in effect at the time such reference becomes operative.
Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with
GAAP consistently applied. That certain terms or computations are explicitly
modified by the phrase "in accordance with GAAP" shall in no way be construed
to limit the foregoing. The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole, including the
Exhibits and Schedules hereto, as the same may from time to time be amended,
modified or supplemented, and not to any particular section, subsection or
clause contained in this Agreement. Wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include
the singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender shall include the masculine, the feminine and the neuter. Any
reference to the "knowledge" of Company or its Subsidiaries shall mean the
actual knowledge of any of the officers or chairman of the board of directors
of Company.
THE PURCHASE OF CONVERTIBLE PREFERRED STOCK
1.1. . Prior to the Closing, Company shall have duly authorized the issuance
and sale to Purchaser of the number of shares of Convertible Preferred Stock
set forth in Section 2.2 below.
. Subject to the terms and conditions set forth in this
Agreement, Purchaser agrees to subscribe for and purchase from Company, and
Company agrees to issue and sell to Purchaser, on the Closing Date an aggregate
of 5,000,000 shares of Convertible Preferred Stock containing the terms,
preferences and limitations set forth in Exhibit A to this Agreement.
The aggregate purchase price for the aggregate number of
shares subscribed for by Purchaser is $25,000,000, payable in full on the
Closing Date.
. The closing of the purchase and sale of the Convertible
Preferred Stock (the "Closing") shall take place within five Business Days
after the satisfaction or waiver of the conditions set forth in Article VI
hereof or such date and time as shall be mutually agreed to by the parties
hereto (the "Closing Date") at the offices of Weil, Gotshal & Manges LLP, 767
Fifth Avenue, New York, New York, or such other place as shall be mutually
agreed to by the parties hereto.
On the Closing Date, Company will deliver to Purchaser a
certificate representing the Convertible Preferred Stock to be purchased by
Purchaser registered in such names and in such denominations as Purchaser
requests against delivery by Purchaser of the purchase price therefor by wire
transfer of funds to the account of Company.
. Company shall use the proceeds of the sale of the
Convertible Preferred Stock to finance acquisitions and provide for its working
capital, including repayment of revolving credit indebtedness.
PURCHASER'S REPRESENTATIONS
Purchaser makes the following representations and warranties
to Company, each and all of which shall survive the execution and delivery of
this Agreement and the Closing hereunder:
1.2. . Purchaser is purchasing the Convertible Preferred Stock for its own
account, for investment purposes and not with a view to the distribution
thereof. Purchaser will not, directly or indirectly, offer, transfer, sell,
assign, pledge, hypothecate or otherwise dispose of any of the Convertible
Preferred Stock (or solicit any offers to buy, purchase, or otherwise acquire
any of the Convertible Preferred Stock), except in compliance with the
Securities Act.
. Purchaser is an "accredited investor" (as that term is
defined in Rule 501 of Regulation D under the Securities Act) and by reason of
its business and financial experience, it has such knowledge, sophistication
and experience in business and financial matters as to be capable of evaluating
the merits and risks of the prospective investment, is able to bear the
economic risk of such investment and is able to afford a complete loss of such
investment. Purchaser has had the opportunity to ask such questions of Company
and to review such documents and information as Purchaser deemed necessary in
connection with the purchase of the Convertible Preferred Stock.
. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation.
1.3. . The execution, delivery and performance by Purchaser of this Agreement
and the other Transaction Documents to be executed by it: (i) are within
Purchaser's corporate power; (ii) have been duly authorized by all necessary
corporate action; (iii) are not in contravention of any provision of
Purchaser's certificate of incorporation or by-laws; and (iv) will not violate
any law or regulation, or any order or decree of any court or governmental
instrumentality binding on Purchaser. This Agreement and the other Transaction
Documents to which Purchaser is a party have each been duly executed and
delivered by Purchaser and constitute the legal, valid and binding obligations
of Purchaser, enforceable against it in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
1.4. Restricte. Purchaser understands that the Convertible Preferred Stock as
well as the shares of Common Stock issuable upon conversion thereof are
restricted securities under the federal securities laws inasmuch as they are
being acquired in a transaction not involving a public offering and may be
resold only in certain limited circumstances.
1.5. Brokers . Purchaser has no contract, arrangement or understanding with any
broker, finder or similar agent with respect to the transactions contemplated
by this Agreement.
COMPANY'S REPRESENTATIONS AND WARRANTIES
Company makes the following representations and warranties to
each Purchaser, each and all of which shall survive the execution and delivery
of this Agreement and the Closing hereunder, subject to the provisions of
Section 8.1 hereof:
. After giving effect to the Closing, the authorized capital
stock of Company consists of 100,000,000 shares of Common Stock, $.01 par value
per share, of which 26,046,701 shares are issued and outstanding, and
20,000,000 shares of preferred stock, no par value per share, of which
5,000,000 shares of Convertible Preferred Stock will be issued and outstanding.
All of such issued and outstanding shares, including, without limitation
(subject to the filings referred to in Section 4.6(vii)(A)), the Convertible
Preferred Stock, are validly issued, fully paid and non-assessable, after
payment in full of the purchase price referred to in Section 2.2. Except as set
forth on Schedule 4.1, (i) there is no existing option, warrant, call,
commitment or other agreement to which Company is a party requiring, and there
are no convertible securities of Company outstanding which upon conversion
would require, the issuance of any additional shares of Stock of Company or
other securities convertible into shares of equity securities of Company, other
than the Convertible Preferred Stock, and (ii) there are no agreements to which
Company is a party or, to the knowledge of Company, to which any stockholder or
warrant holder of Company is a party, with respect to the voting or transfer of
the Stock of Company, other than the Stockholders Agreement. Except as set
forth on Schedule 4.1, there are no stockholders' preemptive rights or rights
of first refusal or other similar rights with respect to the issuance of Stock
by Company, other than pursuant to the Transaction Documents. True and correct
copies of the articles of incorporation and by-laws of Company have been
delivered to Purchaser.
1.6. . The issuance of the Convertible Preferred Stock has been duly authorized
by all necessary corporate action on the part of Company and, upon delivery to
Purchaser of certificates therefor against payment in accordance with the terms
hereof, the Convertible Preferred Stock will have been validly issued and fully
paid and non-assessable, free and clear of all pledges, liens, encumbrances and
preemptive rights. The issuance of shares of Common Stock upon conversion of
the Convertible Preferred Stock has been duly authorized by all necessary
corporate action on the part of Company and, when issued upon conversion of the
Convertible Preferred Stock, such Common Stock will have been validly issued
and fully paid and non-assessable. Company has duly reserved 5,000,000 shares
of Common Stock for issuance pursuant to the terms of the Convertible Preferred
Stock.
1.7. Securitie. In reliance on the investment representations contained in
Sections 3.1 and 3.2, the offer, issuance, sale and delivery of the Convertible
Preferred Stock, as provided in this Agreement, are exempt from the
registration requirements of the Securities Act and all applicable state
securities laws, and are otherwise in compliance with such laws. Neither
Company nor any Person acting on its behalf has taken or will take any action
(including, without limitation, any offering of any securities of Company under
circumstances which would require the integration of such offering with the
offering of the Convertible Preferred Stock under the Securities Act and the
rules and regulations of the SEC thereunder) which might subject the offering,
issuance or sale of the Convertible Preferred Stock to the registration
requirements of Section 5 of the Securities Act.
1.8. Corporate. Company and each of its Subsidiaries, if any, (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Florida in the case of Company and as set forth on
Schedule 4.5 in the case of its Subsidiaries; (ii) is duly qualified as a
foreign corporation and in good standing under the laws of each jurisdiction
where its ownership or lease of property or the conduct of its business
requires such qualification (except for jurisdictions in which such failure to
so qualify or to be in good standing would not have a Material Adverse Effect);
(iii) has the requisite corporate power and authority and the legal right to
own, pledge, mortgage or otherwise encumber and operate its properties, to
lease the property it operates under lease, and to conduct its business as now
being conducted; (iv) has, or has applied for, all material licenses, permits,
certificates, consents or approvals from or by, and has made all material
filings with, and has given all material notices to, all Governmental
Authorities having jurisdiction, to the extent required for such ownership,
operation and conduct including, but not limited to, those required by the
Department of Transportation or any other Governmental Authority having
jurisdiction over interstate, intrastate or international transportation of
goods by trucks; (v) is in compliance with its certificate or articles of
incorporation and by-laws; and (vi) is in compliance with all applicable
provisions of law, including, but not limited to, regulations promulgated by
the Department of Transportation and analogous state and provincial
requirements, except for such non-compliance which would not have a Material
Adverse Effect.
1.9. Subsidiar. There currently exist no Subsidiaries of Company other than as
set forth on Schedule 4.5 hereto, which sets forth such Subsidiaries, together
with their respective jurisdictions of organization, and the authorized and
outstanding capital Stock of each such Subsidiary, by class and number and
percentage of each class owned by Company or a Subsidiary of Company or any
other Person. There are no options, warrants, rights to purchase or similar
rights covering capital Stock for any such Subsidiary.
1.10. Corporate. The execution, delivery and performance by Company of this
Agreement, the other Transaction Documents to which it is a party and all
instruments and documents to be delivered by Company, the issuance and sale of
the Convertible Preferred Stock and the consummation of the other transactions
contemplated by any of the foregoing: (i) are within Company's corporate power
and authority; (ii) have been duly authorized by all necessary or proper
corporate action; (iii) are not in contravention of any provision of Company's
articles of incorporation or by-laws; (iv) will not violate any law or
regulation, or any order or decree known to Company of any court or
governmental instrumentality; (v) will not conflict with or result in the
breach or termination of, constitute a default under or accelerate any
performance required by, any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which Company or any of its Subsidiaries is a
party or by which Company, any of its Subsidiaries or any of their property is
bound; (vi) will not result in the creation or imposition of any Lien upon any
of the property of Company or any of its Subsidiaries; and (vii) do not require
the consent or approval of, or any filing with, any Governmental Authority or
any other Person (except (A) for the filing of an amendment to Company's
articles of incorporation to authorize additional shares of Common Stock,
preferred stock, and the Convertible Preferred Stock, substantially in the form
of the Certificate of Designation, (B) for those filings required by the
Registration Rights Agreement, (C) compliance with the applicable requirements
of the HSR Act, (D) the approval by the holders of the Common Stock of Company
of such amendment to Company's articles of incorporation, (E) to the extent
previously obtained or made and (F) as set forth in Schedule 4.6 hereto). At or
prior to the Closing Date, each of this Agreement and the other Transaction
Documents shall have been duly executed and delivered by Company and each shall
then constitute a legal, valid and binding obligation of Company, enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity), and an amendment to
Company's articles of incorporation containing the provisions of the
Certificate of Designation shall have been duly filed with the Secretary of
State of the State of Florida.
. 1.11. The audited consolidated balance sheet of Company as
at December 31, 1998, and the related consolidated statements of operations,
changes in Total Nonredeemable Preferred Stock, Common Stock and Stockholders'
Equity and cash flows for the year then ended, with the opinion thereon of
PricewaterhouseCoopers LLP, and the unaudited consolidated balance sheet of
Company as at March 31, 1999 (the "Balance Sheet") and the related unaudited
consolidated statements of operations, changes in Total Nonredeemable Preferred
Stock, Common Stock and Stockholders' Equity and cash flows for the three
months then ended, copies of which have previously been delivered to Purchaser,
have been prepared in conformity with GAAP consistently applied throughout the
periods involved and present fairly in all material respects the consolidated
financial position of Company as at the dates thereof, and the consolidated
results of its operations and cash flows for the periods then ended, subject,
in the case of the interim financial statements, to normal year-end audit
adjustments.
(a) Except as set forth on Schedule 4.7, neither Company nor any of its
Subsidiaries has any material obligations, contingent or otherwise, including,
without limitation, liabilities for Charges, long-term leases or unusual
forward or long-term commitments which are not reflected in the Balance Sheet,
other than those which are not required by GAAP to be so reflected and those
incurred since March 31, 1999, in the ordinary course of business.
(b) Except as set forth on Schedule 4.7, no dividends or other distributions
have been declared, paid or made upon any shares of capital Stock of Company,
nor have any shares of capital Stock of Company been redeemed, retired,
purchased or otherwise acquired for value by Company in either case since March
31, 1999. 1.12. . (a) Except as set forth on Schedule 4.8, neither Company nor
any of its Subsidiaries owns any real estate. Each of Company and its
Subsidiaries has good and marketable and insurable fee simple title to its
owned real property, free and clear of all Liens, except those of an immaterial
customary nature and encumbrances of record which do not impair Company's use
thereof. Each of Company and its Subsidiaries has valid and marketable
leasehold interests in the leases described in Schedule 4.8 hereto, and, except
as set forth on Schedule 4.8, good and marketable title to, or valid leasehold
interests in, all of its other properties and assets free and clear of all
Liens.
(b) All real property leased by Company and its Subsidiaries is set forth on
Schedule 4.8. Each of such leases is valid and enforceable in accordance with
its terms (subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity)) and is in full force and effect. Company has delivered to Purchaser
true and complete copies of each of such leases set forth on Schedule 4.8(b)
and all documents affecting the rights or obligations of Company or any of its
Subsidiaries, including, without limitation, any non-disturbance and
recognition agreements, subordination agreements, attornment agreements and
agreements regarding the term or rental of any of the leases. Except as set
forth on Schedule 4.8, none of Company, any of its Subsidiaries nor, to its
knowledge, any other party to any such lease is in default of its obligations
thereunder or has delivered or received any notice of default under any such
lease, nor has any event occurred which, with the giving of notice, the passage
of time or both, would constitute a default under any such lease.
(c) Except as disclosed on Schedule 4.8, neither Company nor any of its
Subsidiaries is obligated under or a party to, any option, right of first
refusal or any other contractual right to purchase, acquire, sell, assign or
dispose of any real property owned or leased by Company or such Subsidiary.
1.13. . Schedule 4.9 contains a true, correct and complete list and description
of all Material Contracts. Each Material Contract is a valid and binding
agreement of Company or its Subsidiaries (as the case may be) enforceable
against Company or such Subsidiary in accordance with its terms (subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity)), and neither Company nor any of its Subsidiaries has any knowledge
that any Material Contract is not a valid and binding agreement against the
other parties thereto. Company and each of its Subsidiaries has fulfilled all
material obligations required pursuant to the Material Contracts to have been
performed by Company or such Subsidiary on its part. Except as set forth in
Schedule 4.9, neither Company nor any of its Subsidiaries is in material
default or breach, nor to Company's or such Subsidiary's knowledge is any third
party in default or breach, under or with respect to any Material Contract.
1.14. Environme. (a) Except as set forth on Schedule 4.10, to Company's and its
Subsidiaries' knowledge, all real property owned, leased or otherwise operated
by Company and its Subsidiaries (each, a "Facility") is free of contamination
from any substance, waste or material (i) currently identified to be toxic or
hazardous pursuant to, or which may result in liability under, any
Environmental Law or (ii) within the definition of a substance which is toxic
or hazardous under any Environmental Law, including, without limitation, any
asbestos, pcb, radioactive substance, methane, volatile hydrocarbons,
industrial solvents, oil or petroleum or chemical liquids or solids, liquid or
gaseous products, or any other material or substance which has in the past or
could at any time in the future cause or constitute a health, safety, or
environmental hazard to any Person or property or result in any Environmental
Liabilities and Costs ("Hazardous Substance") of more than $100,000 or which,
in either case, could have a Material Adverse Effect. Except as set forth on
Schedule 4.10, to Company's knowledge, neither Company nor any of its
Subsidiaries has caused or suffered to occur any release, spill, migration,
leakage, discharge, spillage, uncontrolled loss, seepage, or filtration of
Hazard Substances at or from any Facility (a "Spill") which could result in
Environmental Liabilities and Costs in excess of $100,000.
(b) Company and each Subsidiary has generated, treated, stored and disposed of
any Hazardous Substances in full compliance with applicable Environmental Laws,
except for such non-compliances which would not have a Material Adverse Effect.
(c) Company and each Subsidiary has obtained, or has applied for, and is in
full compliance with and in good standing under all permits required under
Environmental Laws (except for such failures which would not have a Material
Adverse Effect) and neither Company nor any of its Subsidiaries has any
knowledge of any proceedings to substantially modify or to revoke any such
permit. (d) Except as set forth on Schedule 4.10, there are no investigations,
proceedings or litigation pending or, to Company's or its Subsidiaries'
knowledge, threatened affecting or against Company, any of its Subsidiaries or
the Facilities relating to Environmental Laws or Hazardous Substances. (e)
Except for communications in connection with the matters listed on Schedule
4.10, neither Company nor any of its Subsidiaries has received any
communication or notice (including, without limitation, requests for
information) indicating the potential of Environmental Liabilities and Costs
against Company or its Subsidiaries. (f) Company has provided to Purchaser
copies of all environmental and safety investigations, audits, assessments,
sampling results and other reports relating to Company or any current or former
facilities that are in the possession, custody or control of Company. 1.15. .
(a) There are no strikes or other labor disputes against Company or any of its
Subsidiaries pending or, to Company's or its Subsidiaries' knowledge,
threatened. Hours worked by and payment made to employees of Company and its
Subsidiaries have not been in violation of the Fair Labor Standards Act or any
other applicable law dealing with such matters. All payments due from Company
and each of its Subsidiaries on account of employee health and welfare
insurance have been paid or accrued as a liability on the books of Company or
such Subsidiary. There is no organizing activity involving Company or any of
its Subsidiaries pending or, to Company's or its Subsidiaries' knowledge,
threatened by any labor union or group of employees. There are no
representation proceedings pending or, to Company's or its Subsidiaries'
knowledge, threatened with the National Labor Relations Board, and no labor
organization or group of employees of Company or its Subsidiaries has made a
pending demand for recognition. There are no complaints or charges against
Company or any of its Subsidiaries pending or, to Company's or its
Subsidiaries' knowledge, threatened to be filed with any federal, state, local
or foreign court, governmental agency or arbitrator based on, arising out of,
in connection with, or otherwise relating to the employment or termination of
employment by Company or any of its Subsidiaries of any individual.
(b) Neither Company nor any of its Subsidiaries is, or during the five years
preceding the date hereof was, a party to any labor or collective bargaining
agreement and there are no labor or collective bargaining agreements which
pertain to employees of Company or its Subsidiaries.
1.16. . Except as set forth on Schedule 4.12, neither Company nor any of its
Subsidiaries is engaged in any joint venture or partnership with any other
Person.
1.17. Taxes . Except as set forth on Schedule 4.13, all federal, state, local
and foreign tax returns, reports and statements required to be filed by Company
and its Subsidiaries have been timely filed with the appropriate Governmental
Authority and all such returns, reports and statements are true, correct and
complete in all material respects. All material Charges and other impositions
due and payable for the periods covered by such returns, reports and statements
have been paid prior to the date on which any fine, penalty, interest or late
charge may be added thereto for nonpayment thereof, or any such fine, penalty,
interest, late charge or loss has been paid. Proper and accurate amounts have
been withheld by Company and its Subsidiaries from its employees for all
periods in full and complete compliance with the tax, social security and
unemployment withholding provisions of applicable federal, state, local and
foreign law and such withholdings due and payable have been timely paid to the
respective governmental agencies. Except as set forth in Schedule 4.13, neither
Company nor any of its Subsidiaries has executed or filed with the IRS or any
other Governmental Authority any agreement or other document extending, or
having the effect of extending, the period for assessment or collection of any
Charges. No tax audits or other administrative or judicial proceedings are
pending or to Company's knowledge threatened with regard to any Charges for
which Company or any Subsidiary may be liable and Company has not received
notice that any assessment of Charges is proposed against the Company or any
Subsidiary. Neither Company nor any of its Subsidiaries has filed a consent
pursuant to IRC Section 341(f) or agreed to have IRC Section 341(f)(2) apply to
any dispositions of subsection (f) assets (as such term is defined in IRC
Section 341(f)(4)). None of the property owned by Company or any of its
Subsidiaries is property which such company is required to treat as being owned
by any other Person pursuant to the provisions of Section 168(f)(8) of the
Internal Revenue Code of 1954, as amended, and in effect immediately prior to
the enactment of the Tax Reform Act of 1986 or is "tax-exempt use property"
within the meaning of IRC Section 168(h). Neither Company nor any of its
Subsidiaries has agreed or has been requested to make any adjustment under IRC
Section 481(a) by reason of a change in accounting method or otherwise. Neither
Company nor any of its Subsidiaries has any obligation under any written tax
sharing agreement, except for reimbursement of taxes to AmSouth Bank pursuant
to certain Company tax indemnity agreements. 1.18. No Litiga. Except as
disclosed on Schedule 4.14, no action, claim or proceeding is now pending or,
to the knowledge of Company or its Subsidiaries, threatened against Company or
any of its Subsidiaries, at law, in equity or otherwise, before any court,
board, commission, agency or instrumentality of any federal, state, or local
government or of any agency or subdivision thereof, or before any arbitrator or
panel of arbitrators, which if determined adversely to Company or its
Subsidiaries would be reasonably likely to result in a Material Adverse Effect.
1.19. Brokers . Except as set forth on Schedule 4.15, no broker or finder
acting on behalf of Company or any of its Subsidiaries brought about the
consummation of the transactions contemplated pursuant to this Agreement and
neither Company nor any of its Subsidiaries has any obligation to any Person in
respect of any finder's or brokerage fees (or any similar obligation) in
connection with the transactions contemplated by this Agreement. Company is
solely responsible for the payment of all such finder's or brokerage fees.
1.20. Employmen. Except as set forth on Schedule 4.16, there are no
employment, consulting or management agreements covering officers of Company or
any of its Subsidiaries.
1.21. Patents, . Company and each of its Subsidiaries owns all licenses,
patents, patent applications, copyrights, service marks, trademarks and
registrations and applications for registration thereof, and trade names
necessary to continue to conduct its business as heretofore conducted by it and
now being conducted by it, each of which is listed, together with Patent and
Trademark Office or Copyright Office application or registration numbers, where
applicable, on Schedule 4.17 hereto. To Company's knowledge, Company and each
of its Subsidiaries conducts its businesses without infringement or claim of
infringement of any license, patent, copyright, service mark, trademark, trade
name, trade secret or other intellectual property right of others, except as
set forth on Schedule 4.17 hereto. To Company's knowledge, there is no
infringement by others of any license, patent, copyright, service mark,
trademark, trade name, trade secret or other intellectual property right of
Company or any of its Subsidiaries, except as set forth on Schedule 4.17
hereto.
1.22. No Materi. No event has occurred since December 31, 1998 which has had or
could be reasonably expected to have a Material Adverse Effect.
1.23. ERISA . (a) Schedule 4.19 sets forth: (i) all "employee benefit plans",
as defined in Section 3(3) of ERISA, and any other employee benefit
arrangements or payroll practices, including, without limitation, severance
pay, sick leave, vacation pay, salary continuation for disability, consulting
or other compensation agreements, retirement, deferred compensation, bonus,
stock purchase, hospitalization, medical insurance, life insurance and
scholarship programs (the "Plans") maintained by Company and any of its
Subsidiaries or to which Company or and of its Subsidiaries contributed or is
obligated to contribute thereunder, and (ii) all "employee pension plans", as
defined in Section 3(2) of ERISA (the "Pension Plans"), maintained by Company,
any of its Subsidiaries or any of its ERISA Affiliates to which Company, any of
its Subsidiaries or any of its ERISA Affiliates contributed or is obligated to
contribute thereunder. None of the Pension Plans is a "defined benefit pension
plan" subject to Title IV of ERISA or a Multiemployer Plan.
(b) The Pension Plans intended to be qualified under Section 401 of the IRC are
so qualified and the trusts maintained pursuant thereto are exempt from federal
income taxation under Section 501 of the IRC, and nothing has occurred with
respect to the operation of the Pension Plans which could cause the loss of
such qualification or exemption or the imposition of any liability, penalty, or
tax under ERISA or the IRC.
(c) All contributions required by law or pursuant to the terms of the Plans
(without regard to any waivers granted under Section 412 of the IRC) to any
funds or trusts established thereunder or in connection therewith have been
made by the due date thereof (including any valid extension). (d) There is no
material violation of ERISA with respect to the filing of applicable reports,
documents, and notices regarding the Plans with the Secretary of Labor and the
Secretary of the Treasury or the furnishing of such documents to the
participants or beneficiaries of the Plans. (e) True, correct and complete
copies of the following documents, with respect to each of the Plans, have been
made available or delivered to Purchaser by Company: (A) any plans and related
trust documents, and amendments thereto, (B) the most recent Forms 5500
(including any schedules thereto), (C) the last IRS determination letter, (D)
summary plan descriptions, (E) written communications to employees relating to
the Plans and (F) written descriptions of all non-written agreements relating
to the Plans. (f) There are no pending actions, claims or lawsuits which have
been asserted or instituted against the Plans, the assets of any of the trusts
under such Plans or the Plan sponsor or the Plan administrator, or against any
fiduciary of the Plans with respect to the operation of such Plans (other than
routine benefit claims), nor does Company or any of its Subsidiaries have
knowledge of facts which could form the basis for any such claim or lawsuit.
(g) All amendments and actions required to bring the Plans into conformity in
all material respects with all of the applicable provisions of ERISA and other
applicable laws have been made or taken except to the extent that such
amendments or actions are not required by law to be made or taken until a date
after the Closing Date. (h) The Plans have been maintained, in all material
respects, in accordance with their terms and with all provisions of ERISA
(including rules and regulations thereunder) and other applicable Federal and
state law, and neither Company nor any of its Subsidiaries or "party in
interest" or "disqualified person" with respect to the Plans has engaged in a
"prohibited transaction" within the meaning of Section 4975 of the IRC or
Section 406 of ERISA. (i) None of Company, any of its Subsidiaries or any ERISA
Affiliate maintains retired life and retired health insurance plans which are
Welfare Plans and which provide for continuing benefits or coverage for any
participant or any beneficiary of a participant except as may be required under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA") and at the expense of the participant or the participant's
beneficiary. Company, all of its Subsidiaries and all ERISA Affiliates which
maintains a Welfare Plan has materially complied with the notice and
continuation requirements of COBRA and the regulations thereunder. 1.24. .
Except as set forth in Schedule 4.20 hereto and as provided in the Registration
Rights Agreement, neither Company nor any of its Subsidiaries is under any
contractual obligation to register, under the Securities Act, any of its
presently outstanding securities or any securities which may hereafter be
issued.
1.25. SEC Docum. Company has made available to Purchaser a true and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by Company with the SEC since January 1, 1998 and prior to the
date of this Agreement (the "Company SEC Documents"), which are all the
documents (other than preliminary material) that Company was required to file
with the SEC since such date. As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such Company SEC Documents, and
none of the Company SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
1.26. Ordinary . Except as set forth on Schedule 4.7 or in response to the
events described therein, since December 31, 1998, Company and each of its
Subsidiaries has conducted its operations only in the ordinary course of
business consistent with past practice.
1.27. Insurance. Schedule 4.23 hereto contains a complete and correct list of
all policies of insurance of any kind or nature covering Company and its
Subsidiaries, including, without limitation, policies of life, fire, theft,
employee fidelity and other casualty and liability insurance, indicating the
type of coverage, name of insured, the insurer, the premium, the expiration
date of each policy and the amount of coverage, and such policies are in full
force and effect. Complete and correct copies of each such policy have been
furnished or made available to Purchaser. Such policies are, in Company's
judgment, in amounts customary for the industry in which Company or such
Subsidiary operates.
1.28. Minute Bo. The minute books of Company, as previously made available to
Purchaser accurately reflect all formal corporate action of the stockholders
and Board of Directors of Company.
1.29. Year 2000. (a) Each system comprised of software, hardware, databases or
embedded control systems (microprocessor controlled or controlled by any
robotic or other device) the operational failure of which would be reasonably
likely to result in a Material Adverse Effect (collectively, a "System") will
not be materially adversely affected by the advent of the year 2000, the advent
of the twenty-first century or the transition from the twentieth century
through the year 2000 and into the twenty-first century and each System of
Company and its Subsidiaries will be able to accurately process date data,
including, but not limited to, calculating, comparing and sequencing from, into
and between the twentieth century (through year 1999), the year 2000 and the
twenty-first century, including leap year calculations ("Year 2000 Compliant").
Company has no reason to believe that it or any of its Subsidiaries may incur
material expenses arising from or relating to the failure of any of their
Systems as a result of the advent of the year 2000, the advent of the
twenty-first century or the transition from the twentieth century through the
year 2000 and into the twenty-first century.
(b) All vendors of products or services to Company or any of its Subsidiaries,
the operational failure of which would be reasonably likely to result in a
Material Adverse Effect, and such respective products, services and operations,
are (or prior to December 31, 1999, will be), to the knowledge of Company, Year
2000 Compliant. To the knowledge of Company after a reasonably diligent
investigation, each such vendor will continue to furnish its products or
services to Company or its Subsidiaries, as applicable, without interruption or
material delay, on and after January 1, 2000.
1.30. . No information contained in this Agreement or the schedules hereto, any
other Transaction Document or the Financial Statements contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements contained herein or therein not misleading in light of the
circumstances under which made.
COVENANTS
1.31. . Company covenants and agrees that from and after the date hereof
(except as otherwise provided herein, or unless the Required Holders have given
their prior written consent) so long as at least 30% of the shares of
Convertible Preferred Stock issued on the Closing Date are outstanding and so
long as Purchaser and its Affiliates constitute the Required Holders:
(a) . Company shall, and shall cause its Subsidiaries to, keep adequate records
and books of account with respect to their business activities, in which proper
entries, reflecting all of their financial transactions, are made in accordance
with GAAP.
(b) .inancial and Business Information
(i) . Commencing with the month ending May 31, 1999, Company will deliver to
Purchaser as soon as practicable after the end of each month, but in any event
within 30 days thereafter, the information specified on Schedule 5.1(b) hereto.
(ii) Quarterly Informat. Company will deliver to Purchaser as soon as
practicable after the end of each of the first three quarterly fiscal periods
in each fiscal year of Company, but in any event within 45 days thereafter, (A)
an unaudited consolidated balance sheet of Company and its Subsidiaries, if
any, as at the end of such quarter, and (B) unaudited consolidated statements
of income, retained earnings and cash flows of Company and its Subsidiaries, if
any, for such quarter and (in the case of the second and third quarters) for
the portion of the fiscal year ending with such quarter, setting forth in
comparative form in each case the projected consolidated figures for such
period and the actual consolidated figures for the comparable period of the
prior fiscal year. Such statements shall be (1) prepared in accordance with
GAAP consistently applied, (2) in reasonable detail and (3) certified by the
principal financial or accounting officer of Company.
. Company will deliver to Purchaser as soon as
practicable after the end of each fiscal year of Company, but in any event
within 90 days thereafter, (A) an audited consolidated balance sheet of Company
and its Subsidiaries, if any, as at the end of such year, and (B) audited
consolidated statements of income, retained earnings and cash flows of Company
and its Subsidiaries, if any, for such year; setting forth in comparative form
in each case the projected consolidated figures for such year and the actual
consolidated figures for the previous year. Such statements shall be (1)
prepared in accordance with GAAP consistently applied, (2) in reasonable detail
and (3) certified by PricewaterhouseCoopers LLP or such other firm of
independent certified public accountants of recognized national standing
selected by Company and reasonably acceptable to the Required Holders.
. Company will deliver to Purchaser, promptly upon
their becoming available, one copy of each report, notice or proxy statement
sent by Company to its stockholders generally, and of each regular or periodic
report (pursuant to the Exchange Act) and any registration statement,
prospectus or other writing (other than transmittal letters) (including,
without limitation, by electronic means) pursuant to the Securities Act filed
by Company with (i) the SEC or (ii) any securities exchange on which shares of
capital Stock of Company are listed.
. Company will deliver to Purchaser within 30 days
prior to the beginning of each Fiscal Year, a final form of which shall be
delivered within 30 days after the beginning of each Fiscal Year:
(A) draft projected consolidated balance sheets of Company and its
Subsidiaries, if any, for such Fiscal Year, on a monthly basis;
(B) draft projected consolidated cash flow statements of Company and its
Subsidiaries, if any, including summary details of cash disbursements
(including for Capital Expenditures), for such Fiscal Year, on a monthly basis;
and (C) draft projected consolidated income statements of Company and its
Subsidiaries, if any, for such Fiscal Year, on a monthly basis; in each case,
approved by the Board of Directors of Company, together with appropriate
supporting details.
. If requested by Purchaser, Company will deliver
to Purchaser such other information respecting Company's or any of its
Subsidiaries' business, financial condition or prospects as Purchaser may, from
time to time, reasonably request.
. Subject to the first sentence of Section 5.1
hereof, information provided under this Section 5.1(b) which is not otherwise
publicly available shall be available only to Purchaser and Purchaser's
Affiliates (other than Affiliates who are direct competitors of Company) who
are transferees of Convertible Preferred Stock.
(c) . Company authorizes Purchaser to communicate directly with its independent
certified public accountants and tax advisors and authorizes those accountants
to disclose to Purchaser any and all financial statements and other supporting
financial documents and schedules including copies of any management letter
with respect to the business, financial condition and other affairs of Company
and any of its Subsidiaries; provided that Purchaser shall provide Company with
at least two Business Days prior written notice of its intention to communicate
directly with such accountants and shall permit Company to participate in any
such communication with such accountants. Any information obtained from such
accountants shall be available only to Purchaser and Purchaser's Affiliates
(other than Affiliates who are direct competitors of Company) who are
transferees of Convertible Preferred Stock. At or before the Closing Date,
Company shall deliver a letter addressed to such accountants and tax advisors
instructing them to comply with the provisions of this Section 5.1(c).
(d) . Company shall pay all transfer, excise or similar taxes (not including
income or franchise taxes) in connection with the issuance, sale, delivery or
transfer by Company to Purchaser of the Convertible Preferred Stock and the
Common Stock issuable upon conversion thereof, and shall indemnify and save
Purchaser harmless without limitation as to time against any and all
liabilities with respect to such taxes. Company shall not be responsible for
any taxes in connection with the transfer of the Convertible Preferred Stock or
such Common Stock by the holder thereof. The obligations of Company under this
Section 5.1(d) shall survive the payment, prepayment or redemption of the
Convertible Preferred Stock and the termination of this Agreement.
(e) Insurance. Company shall and shall cause each Subsidiary of Company to
maintain insurance covering, without limitation, fire, theft, burglary, public
liability, property damage, product liability, workers' compensation,
directors' and officers' insurance and insurance on all property and assets
material to the operation of the business, all in amounts customary for the
industry, including at least $30,000,000 in excess umbrella liability
insurance. Company shall, and shall cause each of its Subsidiaries to, pay all
insurance premiums payable by them. Company shall maintain key-man life
insurance for Philip A. Belyew in an amount equal to at least $6,000,000.
(f) Employee . (i) With respect to other than a Multiemployer Plan, for each
Plan and Pension Plan intended to be qualified under Section 401(a) of the IRC
hereafter adopted or maintained by Company, any of its Subsidiaries or any
ERISA Affiliate, Company shall (A) seek, or cause its Subsidiaries or ERISA
Affiliates to seek, and receive determination letters from the IRS to the
effect that such Plan or Pension Plan is qualified within the meaning of
Section 401(a) of the IRC; and (B) from and after the adoption of any such Plan
or Pension Plan, cause such plan to be qualified within the meaning of Section
401(a) of the IRC and to be administered in all material respects in accordance
with the requirements of ERISA and Section 401(a) of the IRC.
(ii) With respect to each Welfare Plan hereafter adopted or maintained by
Company, any of its Subsidiaries or any ERISA Affiliate, to the extent
applicable, Company shall comply, or cause its Subsidiaries or ERISA Affiliates
to comply, with the notice and continuation coverage requirements of Section
4980B of the IRC and the regulations thereunder.
(iii) Company shall not, directly or indirectly, and shall not permit its
Subsidiaries or any ERISA Affiliate to directly or indirectly by reason of an
amendment or amendments to, or the adoption of, one or more Pension Plans,
permit the present value of all benefit liabilities, as defined in Title IV of
ERISA, (using the actuarial assumptions utilized by the PBGC upon termination
of a plan) to exceed the fair market value of assets allocable to such benefits
by more than $250,000, or to increase to the extent security must be provided
to any Pension Plan under Section 401(a)(29) of the IRC. Neither Company nor
any of its Subsidiaries shall establish or become obligated to any new Retiree
Welfare Plan, which would result in the present value of future liabilities
under any such plans to exceed $250,000. Neither Company nor any of its
Subsidiaries or ERISA Affiliates shall establish or become obligated to any new
unfunded Pension Plan, which would result in the present value of future
liabilities under any such plans to exceed $250,000. Company shall not directly
or indirectly, and shall not permit its Subsidiaries or any ERISA Affiliate to
(a) satisfy any liability under any Pension Plan by purchasing annuities from
an insurance company or (b) invest the assets of any Pension Plan with an
insurance company, unless, in each case, such insurance company is rated AA by
Standard & Poor's Corporation and the equivalent by each other nationally
recognized rating agency at the time of the investment. (iv) Company, any of
its Subsidiaries and any ERISA Affiliate shall not contribute or become
obligated to contribute to any Multiemployer Plan. (g) . Company shall, and
shall cause each of its Subsidiaries to, comply with all laws, including
Environmental Laws, applicable to it, except where the failure to comply would
not be reasonably likely to result in a Material Adverse Effect.
(h) Maintenan. Company shall, and shall cause each of its Subsidiaries to: (i)
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate existence, and its rights and franchises; (ii) at all
times maintain, preserve and protect all of its patents, trademarks and trade
names, and preserve all the remainder of its material assets, in use or useful
in the conduct of its business and keep the same in good repair, working order
and condition (taking into consideration ordinary wear and tear) and from time
to time make, or cause to be made, all needful and proper repairs, renewals and
replacements, betterments and improvements thereto consistent with industry
practices; provided, however, that Company shall not be required to register
trademarks or pursue litigation if it reasonably determines that the cost
thereof would outweigh the benefits; and (iii) continue to conduct only a
trucking business and businesses related to the business that Company and its
subsidiaries are engaged in on the date hereof.
(i) . Company shall permit representatives of Purchaser, at Purchaser's
expense, to visit and inspect any of the properties of Company and its
Subsidiaries, to examine the corporate books and make copies or extracts
therefrom and to discuss the affairs, finances and accounts of Company and its
Subsidiaries with the principal officers of Company, all at such reasonable
times, upon reasonable notice and as often as Purchaser may reasonably request.
(j) Exchange . Company will, at its expense, promptly upon surrender of any
certificates representing shares of Convertible Preferred Stock at the office
of Company referred to in, or designated pursuant to, Section 10.1 hereof,
execute and deliver to Purchaser so surrendering such certificates a new
certificate or certificates in denominations specified by Purchaser for an
aggregate number of shares of Convertible Preferred Stock equal to the number
of shares of such stock represented by the certificates surrendered.
(k) Lost, Sto. Upon receipt of evidence reasonably satisfactory to Company of
the loss, theft, destruction or mutilation of any certificate for shares of
Convertible Preferred Stock and, in the case of loss, theft or destruction,
upon delivery of an indemnity reasonably satisfactory to Company (which may be
an undertaking by Purchaser to so indemnify Company), or, in the case of
mutilation, upon surrender and cancellation thereof, Company will issue a new
certificate of like tenor for a number of shares of Convertible Preferred Stock
equal to the number of shares of such stock represented by the certificate
lost, stolen, destroyed or mutilated.
1.32. . Company covenants and agrees that from and after the date hereof
(except as otherwise provided herein, or unless the Required Holders have given
their prior written consent) so long as at least 30% of the shares of
Convertible Preferred Stock issued on the Closing Date are outstanding and so
long as Purchaser and its Affiliates constitute the Required Holders:
(a) . Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly in any transaction or related series of transactions,
acquire (including pursuant to a Capital Lease or operating lease) or invest
in, whether for cash, debt, Stock, or other property or assets or by guaranty
of any obligation, any assets or business of any Person other than (i)
acquisitions of assets, other than rolling stock, in the ordinary course of
business of Company with an aggregate purchase price of not more than
$5,000,000 in any Fiscal Year, (ii) acquisitions by Company or wholly-owned
Subsidiaries of Company from Company or any such wholly-owned Subsidiary or
investments therein, (iii) acquisitions of all or substantially all of the
Stock, assets or business of any Person, or a division thereof, involving an
aggregate purchase price of not more than (A) $10,000,000 in any single
transaction, or (B) $5,000,000 in cash, purchase money debt of Company or one
of its' Subsidiaries (other than the Person being acquired) or loans in any
single transaction, (iv) acquisitions of rolling stock in the ordinary course
of business and (v) investments in Cash Equivalents. Purchaser shall have ten
Business Days from the date of confirmed receipt of written notice by
Purchaser's Observer (as defined in the Stockholders Agreement) on the board of
directors (or, if there is no Observer or the Observer is otherwise not
available, of receipt of written notice in accordance with Section 10.1 hereof)
of Company's request to conduct an acquisition (other than the transactions
described in clauses (i)-(v) hereof) to consent or decline to consent to such
acquisition. If Purchaser fails to respond to such request within such time
period, it shall be deemed to have consented to such request. For purposes
hereof, the purchase price of leased property shall be its GAAP value in the
case of a Capital Lease, and its Fair Market Value, as determined by Company's
Board of Directors, in the case of an operating lease. Company shall not, and
shall not permit any of its Subsidiaries to, invest in any Person if, after
giving effect thereto, such Person would be an Affiliate, but not a Subsidiary,
of Company.
(b) Sales of . Company shall not, and shall not permit any Subsidiary of
Company to, (i) sell, transfer, convey or otherwise dispose of any assets or
properties or (ii) liquidate, dissolve or wind up Company, or any of its
Subsidiaries, except for transfers to Company, whether voluntary or
involuntary; provided, however, that the foregoing shall not prohibit (1) the
sale of inventory or rolling stock or sale-leaseback transactions in the
ordinary course of business, (2) the sale of surplus or obsolete equipment and
fixtures, (3) transfers resulting from any casualty or condemnation of assets
or properties, or (4) sales involving an aggregate sale price of not more than
$1,000,000 in any single transaction.
(c) . Company shall not and shall not permit any Subsidiary of Company to take
or omit to take any action, which act or omission would constitute a default or
an event of default under any agreement, document or instrument to which it is
a party, after giving effect to any applicable cure period (a "Cross Default"),
(A) involving the failure to make any payment (whether of principal, interest
or otherwise) due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) in respect of any Indebtedness of the type
described in clauses (i), (ii) or (iii) of the definition of "Indebtedness" of
Company, which Indebtedness is in an aggregate amount exceeding $1,000,000, or
(B) causing (or permitting any holder of such Indebtedness or a trustee to
cause) such Indebtedness or a portion thereof in an aggregate amount exceeding
$1,000,000, to become due prior to its stated maturity or prior to its
regularly scheduled dates of payment.
(d) . Company shall not and shall not permit any Subsidiary of Company to make
or accrue any loans or other advances of money to any employee of Company or
such Subsidiary, other than (i) loans in an aggregate amount outstanding not to
exceed $1,000,000 at any one time, (ii) loans outstanding on the date hereof as
set forth in Schedule 5.2(d) and (iii) loans made in connection with
acquisitions permitted under Section 5.2(a) hereof.
(e) Capital S. Company shall not issue or agree to issue any additional shares
of Convertible Preferred Stock, nor any Stock senior to or pari passu with the
Convertible Preferred Stock nor any securities exchangeable for or convertible
into such Stock.
(f) Transacti. Company shall not and shall not permit any Subsidiary of Company
to enter into or be a party to any transaction with any Affiliate of Company or
such Subsidiary, except (i) transactions in existence on the date hereof as set
forth on Schedule 5.2(f) or expressly permitted hereby, (ii) transactions in
the ordinary course of and pursuant to the reasonable requirements of Company's
or such Subsidiary's business and upon fair and reasonable terms that are fully
disclosed to Purchaser and are no less favorable to Company or such Subsidiary
than would be obtained in a comparable arm's-length transaction with a Person
not an Affiliate of Company or such Subsidiary, (iii) transactions between
Company and its wholly-owned Subsidiaries or between such Subsidiaries and (iv)
payment of compensation to employees and directors' fees.
(g) Indebtedn. Company shall not and shall not permit any Subsidiary of Company
to incur or suffer to exist any Indebtedness except: (i) Indebtedness existing
on the date hereof and listed on Schedule 4.9; (ii) Permitted Indebtedness;
(iii) Indebtedness, inclusive of Indebtedness referred to in clause (i) above;
provided that at no time shall the ratio of Company's Indebtedness plus the
Liquidation Preference (as such term is defined in Company's articles of
incorporation) of the shares of outstanding Convertible Preferred Stock, plus
all declared or accrued and unpaid dividends thereon, to EBITDA be greater than
4.00:1.00, determined as of the last day of the second fiscal quarter and
Fiscal Year for each Fiscal Year for the twelve-month period ending on such
date; or (iv) Indebtedness owing by Company to any of its wholly-owned
Subsidiaries or by any of Company's wholly-owned Subsidiaries to any other
wholly-owned Subsidiaries or Company. Company shall not incur or issue any
Indebtedness which is convertible into or exchangeable for Stock nor issued
together with Stock or warrants to acquire Stock. For purposes of this Section
5.2(g), "EBITDA" shall mean the consolidated operating income (before
extraordinary items, interest, taxes, depreciation and amortization) of Company
and its Subsidiaries, giving pro forma effect to the EBITDA of any Persons
acquired by Company during the period for which the ratio is calculated, as if
the acquisition was consummated on the first day of each twelve month period,
determined in accordance with GAAP.
(h) Restricte. Company shall not, and shall not agree to, and shall not permit
any Subsidiary of Company to make, or agree to make, any Restricted Payments
nor shall Company permit any Subsidiary to make or agree to make such payments
with respect to Company's Stock; provided, however, that Company may (i)
declare and pay cash dividends on the Convertible Preferred Stock and (ii)
redeem the Convertible Preferred Stock in accordance with its terms.
(i) Mergers a. Neither Company nor any Subsidiaries of Company shall directly
or indirectly, by operation of law or otherwise, merge with, consolidate with,
or otherwise combine with any Person, nor shall Company create any Subsidiary,
other than (i) the creation of wholly-owned Subsidiaries, (ii) mergers of
wholly-owned Subsidiaries of Company into Company or any other of its
wholly-owned Subsidiaries or (iii) in connection with Permitted Acquisitions;
provided that at all times Company shall be the surviving entity of any such
combination; provided, however, that clauses (i) and (ii) of this Section
5.2(i) shall not apply to any Canadian Subsidiary of Company so long as Company
holds at least 80% of the voting and equity Stock of such Canadian Subsidiary.
(j) Amendment. Company shall not authorize, adopt or approve an amendment to
the articles of incorporation of Company or the by-laws of Company, except to
increase the number of authorized shares of Common Stock and as contemplated by
Section 4.6(vii) hereof.
1.33. . Upon the occurrence and during the continuance of an Event of Default
by Company (subject to notice and opportunity to cure as set forth in the
definition of Event of Default), in addition to any other remedies available at
law or in equity, the holders of the Convertible Preferred Stock shall be
entitled to elect two members of the Board of Directors of Company in
accordance with the provisions of the Certificate of Designation.
1.34. Certain T. (a) In the event (i) of a Final Determination (as defined
below) that, due to any reason (including by reason of any of the terms of
Convertible Preferred Stock) other than an act or failure to act of Purchaser
(including by reason of the application of IRC Section 246(c) or IRC Section
246A) or Purchaser being other than a corporation, dividends paid or accrued or
deemed paid or accrued on the Convertible Preferred Stock are not eligible for
the dividends received deduction provided under the Dividends Deduction Laws
(as defined in Section 5.5 below) (the "Dividends-Received Deduction"), (ii)
any Dividends Deduction Law or any similar or corresponding state or local law
is amended to reduce or eliminate or otherwise limit the Dividends-Received
Deduction available to Purchaser or (iii) any dividend with respect to the
Convertible Preferred Stock does not constitute, in whole or in part, a
dividend for federal income tax purposes or such dividend is subject to Section
1059 of the IRC (in either case, an "Excess Distribution"), Company shall pay
to Purchaser with respect to each such dividend payment, no later than the
Payment Date (as defined below), an additional payment (the "Gross-Up Payment")
such that the net amount of Gross-Up Payment received and retained by Purchaser
after payment by Purchaser of any federal, state and local income tax payable
with respect to such Gross-Up Payment shall equal, in the case of (i) or (ii)
above, the difference between (x) the federal, state and local income tax
payable by Purchaser with respect to such dividend in its taxable year in which
the dividend was paid or deemed paid and (y) the federal, state and local
income tax which would have been payable by Purchaser in its taxable year in
which the dividend was paid or deemed paid if the events described in (i) or
(ii) had not occurred and in the case of (iii) above, an amount which, when
taken together with the aggregate distributions (whether treated as dividends
or Excess Distributions for federal income tax purposes) paid or deemed paid to
Purchaser during any taxable year, would cause Purchaser's net yield in dollars
(after taking into effect the federal income tax consequences of treating the
Excess Distributions received by Purchaser as capital gain received upon the
taxable sale or exchange of Convertible Preferred Stock) to be equal to the net
yield in dollars which would have been received by Purchaser had none of the
distributions paid or deemed paid to Purchaser during such taxable year
constituted Excess Distributions, in all cases together with any interest or
penalties actually payable by Purchaser to the IRS or any other applicable
taxing authority by reason of such events.
(b) A "Final Determination" shall mean (i) a decision, judgment, decree or
other order by any court of competent jurisdiction, which decision, judgment,
decree or other order has become final or (ii) a closing agreement entered into
under Section 7121 (or any successor to such Section) of the IRC or any
corresponding provision of state or local law, or any other settlement
agreement entered into in connection with an administrative or judicial
proceeding and consented to by Purchaser or any member of its consolidated
group. The "Payment Date" shall mean the date that is 90 days after the end of
the relevant taxable year.
(c) If Purchaser is notified formally or informally of any audit, examination
or proceeding by the IRS or any other taxing authority with respect to the
availability of the Dividends-Received Deduction, Purchaser shall promptly
notify Company of such audit, examination or proceeding; provided, however,
that Purchaser's failure to give such notice or to keep Company fully informed
concerning a Contest (as defined below) shall not affect Company's obligation
to make Gross-Up Payments in accordance with this Section. Purchaser shall have
exclusive control and responsibility to conduct any audit, examination,
proceeding or litigation (a "Contest") with respect to such issue. (d) All
subsequent holders of the Convertible Preferred Stock shall be entitled to all
of the benefits of this Section; provided that any such subsequent holder
qualifies for the Dividends-Received Deduction under the then current Dividend
Deductions Laws at the time of its acquisition of the Convertible Preferred
Stock. 1.35. . Company will not (i) in any income tax return or claim for
refund of income tax or other submission to the IRS or other taxing authority
claim a deduction in respect of amounts paid or payable under the Convertible
Preferred Stock, whether as interest or pursuant to any other statutory
provisions or regulation now in effect or hereafter enacted or adopted, except
to the extent that any such deduction shall not, in the opinion of counsel
satisfactory to the Required Holders, operate to jeopardize the availability to
Purchaser of the dividends received deduction provided by Section 243(a)(1) of
the IRC, or any successor provision or any similar or corresponding provision
under state or local law (collectively, the "Dividends Deduction Laws"), (ii)
in any report to stockholders, or to any governmental body having jurisdiction
over Company or otherwise treat the Convertible Preferred Stock other than as
equity capital or the dividends paid thereon other than as dividends paid on
equity capital unless required to do so by a governmental body having
jurisdiction over the accounts of Company or by a change in GAAP required as a
result of action by an authoritative accounting standards-setting body, and
(iii) except to the extent permitted in clause (i) above and other than as
expressly permitted by this Agreement or Company's articles of incorporation
take any action which would result in the dividends paid by Company on the
Convertible Preferred Stock out of Company's current or accumulated earnings
and profits being ineligible for the dividends received deduction provided by
any Dividends Deduction Laws.
CONDITIONS PRECEDENT
1.36. . The obligation of Purchaser to purchase the Convertible Preferred Stock
pursuant to Section 2.2 hereof, is subject to the condition that Purchaser
shall have received, on the Closing Date, the following, each dated the Closing
Date unless otherwise indicated, in form and substance satisfactory to the
Required Holders:
(a) Favorable opinions of Womble, Carlyle, Sandridge & Rice, counsel to
Company, substantially in the form attached hereto as Exhibit D, it being
understood that to the extent that such opinion of counsel to Company shall
rely upon any other opinion of counsel, each such other opinion shall be in
form and substance reasonably satisfactory to the Required Holders and shall
provide that Purchaser may rely thereon.
(b) Resolutions of the board of directors of Company, certified by the
Secretary or Assistant Secretary of Company, as of the Closing Date, to be duly
adopted and in full force and effect on such date, authorizing (i) the
consummation of each of the transactions contemplated by this Agreement and
(ii) specific officers to execute and deliver this Agreement and each other
Transaction Document to which it is a party. (c) Governmental certificates,
dated the most recent practicable date prior to the Closing Date, with telegram
updates where available, showing that Company is organized and in good standing
in the jurisdiction of its organization and is qualified as a foreign
corporation and in good standing in all other jurisdictions in which it is
qualified to transact business. (d) True and correct copies, certified by the
Secretary or Assistant Secretary of Company, of the document evidencing the
terms of the Convertible Preferred Stock, which shall contain the terms set
forth in Exhibit A attached hereto and evidence of the filing of an amendment
to the articles of incorporation reflecting the provisions of the Certificate
of Designation with the Secretary of State of the State of Florida. (e) A copy
of the organizational charter and all amendments thereto of Company, including
the amendment contemplated by Section 4.6(vii) hereof, certified as of a recent
date by the Secretary of State of the State of Florida, and copies of Company's
by-laws, certified by the Secretary or Assistant Secretary of Company as true
and correct as of the Closing Date. (f) The letter from Company to its
accountants referred to in Section 5.1(c). (g) The Registration Rights
Agreement and the Stockholders Agreement duly executed by the parties thereto.
(h) Certificates of the Secretary or an Assistant Secretary of Company, dated
the Closing Date, as to the incumbency and signatures of the officers of
Company executing this Agreement, the Convertible Preferred Stock, each other
Transaction Document to which it is a party and any other certificate or other
document to be delivered pursuant hereto or thereto, together with evidence of
the incumbency of such Secretary or Assistant Secretary. (i) Certificate of the
President of Company, dated the Closing Date, stating that all of the
representations and warranties of Company contained herein or in the other
Transaction Documents are true and correct on and as of the Closing Date as if
made on such date and that no breach of any covenant contained in Article V has
occurred or would result from the Closing hereunder. 1.37. . The obligation of
each Purchaser to purchase the Convertible Preferred Stock pursuant to Section
2.2 is subject to the additional conditions precedent that:
(a) Such Purchaser shall have received evidence that the insurance policies
provided for in Section 4.23 are in full force and effect, certified by the
insurer thereof.
(b) Company shall have paid all reasonable fees and expenses of (i) GE
Capital's outside counsel, Weil, Gotshal & Manges LLP, and (ii) all special
local counsel retained in connection with this Agreement and the transactions
contemplated thereby. (c) There shall not have occurred any event or condition
since December 31, 1998 which could have a Material Adverse Effect. (d) All of
the representations and warranties of Company contained herein or in the other
Transaction Documents shall be true and correct on and as of the Closing Date
as if made on such date and no breach of any covenant contained in Article V
shall have occurred or would result from the Closing hereunder. (e) All
applicable waiting periods under the HSR Act shall have expired. (f) The
Closing shall have occurred no later than May 31, 1999. 1.38. . The obligation
of Company to sell the Convertible Preferred Stock pursuant to Section 2.2 is
subject to the conditions precedent that:
(a) All of the representations and warranties of Purchaser contained herein or
in the other Transaction Documents shall be true and correct on and as of the
Closing Date as if made on such date.
(b) All applicable waiting periods under the HSR Act shall have expired.
(c) Stockholders of Company shall have approved the amendment to the articles
of incorporation to increase the number of shares of Common Stock and preferred
stock in connection with the issuance of Convertible Preferred Stock to
Purchaser. (d) The Closing shall have occurred no later than May 31, 1999.
SECURITIES LAW MATTERS
1.39. . Each certificate representing the Convertible Preferred
Stock shall bear a legend substantially in the following form:
"THE SERIES A CONVERTIBLE PREFERRED STOCK REPRESENTED BY THIS
CERTIFICATE HAS BEEN ACQUIRED BY THE HOLDER FOR ITS OWN
ACCOUNT, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO THE
DISTRIBUTION OF SUCH CONVERTIBLE PREFERRED STOCK. THE SHARES
OF SERIES A CONVERTIBLE PREFERRED STOCK HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION THEREFROM."
SURVIVAL; INDEMNIFICATION
1.40. . All of the representations and warranties made by any party in this
Agreement or pursuant hereto shall survive the Closing until the second
anniversary of the Closing Date; provided, however, that (i) the
representations and warranties of Company under Section 4.10 shall survive
until the fourth anniversary of the Closing Date and (ii) the representations
and warranties of Company under Sections 4.13 and 4.19 shall survive for their
respective statutes of limitations.
1.41. Indemnifi. Company agrees to indemnify and hold harmless Purchaser and
its Affiliates and their respective officers, directors and employees
(collectively, the "Indemnified Parties") from and against any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, attorneys' fees, expenses and disbursements of any kind, other than any
special or consequential damages ("Losses"), which may be imposed upon,
incurred by or asserted against such Purchaser or such other indemnified
Persons in any manner relating to or arising out of any untrue representation,
breach of warranty or failure to perform any covenants or agreement by Company
contained herein or in any certificate or document delivered pursuant hereto or
arising out of any Environmental Law applicable to Company or its Subsidiaries
or in connection with any third-party claim otherwise relating to or arising
out of the transactions contemplated hereby; provided that Company shall have
no obligation to an Indemnified Party hereunder with respect to liabilities
arising from the gross negligence or willful misconduct of that Indemnified
Party as determined by a court of competent jurisdiction. Each Indemnified
Party shall, as soon as practicable after receipt of notice of a claim or
action against such Indemnified Party in respect of which indemnity may be
sought hereunder, notify Company in writing of the claim or action (stating in
reasonable detail the facts giving rise to such action); provided that the
failure to notify Company shall not relieve Company from any liability which it
may have to an Indemnified Party except to the extent that Company was
prejudiced by such failure, and in no event shall such failure relieve Company
from any other liability which it may have to such Indemnified Party. If any
such claim or action shall be brought against an Indemnified Party, and it
shall have notified Company, Company shall be entitled to participate therein,
and, to the extent that it wishes, to assume the defense therein, with counsel
reasonably satisfactory to the Indemnified Party. After notice to the
Indemnified Party from Company of its election to assume the defense of any
claim or action, Company shall not be liable to the Indemnified Party for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof. Company may not without the prior written
consent of the Indemnified Party, not to be unreasonably withheld, agree to (i)
any settlement of any claim or action indemnifiable hereunder, other than a
settlement solely for monetary damages for which Company shall be responsible
hereunder or (ii) any remedy or relief which will be applied against the
Indemnified Party. In any action hereunder as to which Company has assumed the
defense thereof with counsel reasonably satisfactory to the Indemnified Party,
the Indemnified Party shall continue to be entitled to participate in the
defense thereof, with counsel of its own choice, but Company shall not be
obligated hereunder to reimburse the Indemnified Party for the costs thereof.
Company shall only be liable to the Indemnified Parties for any Losses
resulting from a breach of representation or warranty (i) if the claim therefor
is asserted in writing prior to the end of the applicable survival period as
set forth in Section 8.1 hereof; (ii) which exceed an aggregate amount equal to
$500,000 and only for such Losses in excess thereof, and (iii) up to an
aggregate amount of $15,000,000.
EXPENSES
Company shall pay all reasonable out-of-pocket expenses of
(i) GE Capital in connection with the preparation of the Transaction Documents
and the transactions contemplated thereby including all legal expenses, other
than the filing fee paid by GE Capital in connection with filings under the HSR
Act, and (ii) the Required Holders in connection with (A) any amendment,
modification or waiver, or consent with respect to, any of the Transaction
Documents, and (B) any attempt to enforce any rights of Purchaser against
Company, any Subsidiary of Company or any other Person, that may be obligated
to Purchaser by virtue of any of the Transaction Documents (including the
reasonable fees and expenses of all of its counsel and consultants retained in
connection with the Transaction Documents and the transactions contemplated
thereby).
MISCELLANEOUS
1.42. . Whenever it is provided herein that any notice, demand, request,
consent, approval, declaration or other communication shall or may be given to
or served upon any of the parties by another, or whenever any of the parties
desires to give or serve upon another any such communication with respect to
this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and either shall be
delivered in person with receipt acknowledged or by registered or certified
mail, return receipt requested, postage prepaid, or by telecopy and confirmed
by telecopy answerback addressed as follows:
If to Company:
Transit Group, Inc.
2859 Paces Ferry Road
Suite 1740
Atlanta, GA 30339
Attn: President
Telecopy Number: (770) 444-0246
with a copy to:
Womble, Carlyle, Sandridge & Rice, PLLC
Suite 3500
One Atlantic Center
1201 West Peachtree Street
Atlanta, GA 30309
Attn: Sharon L. McBrayer, Esq.
Telecopy Number: (404) 870-4825
If to Purchaser:
GE Capital:
GE Capital Equity Investments, Inc.
120 Long Ridge Road
Stamford, Connecticut 06927
Attn: GE Equity Group-Transit
Telecopy Number: (203) 357-6426
with copies to:
General Electric Capital Corporation
120 Long Ridge Road
Stamford, Connecticut 06927
Attention: GE Equity Group Legal Counsel
Telecopy Number: (203) 357-3047
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Ted S. Waksman, Esq.
Telecopy Number: (212) 310-8007
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback, or
three (3) Business Days after the same shall have been deposited with the
United States mail.
1.43. . Except as otherwise provided herein, this Agreement shall be binding
upon and inure to the benefit of the parties to this Agreement and their
respective successors and permitted assigns. Nothing in this Agreement, express
or implied, is intended or shall be construed to give any person other than the
parties to this Agreement or their respective successors or assigns any legal
or equitable right, remedy or claim under or in respect of any agreement or any
provision contained herein.
1.44. Amendment. No amendment or waiver of any provision of this Agreement or
any other Transaction Document nor consent to any departure by Company
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Company and the Required Holders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given. No action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action, of compliance with any
representations, warranties, covenants or agreements contained herein. The
waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any preceding or succeeding breach
and no failure by either party to exercise any right or privilege hereunder
shall be deemed a waiver of such party's rights or privileges hereunder or
shall be deemed a waiver of such party's rights to exercise the same at any
subsequent time or times hereunder.
1.45. Successor. Neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof shall be assignable by Company
without the prior written consent of the Required Holders. Any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by Purchaser only in connection with the transfer of shares of
Convertible Preferred Stock without the prior written consent of Company,
except the obligation of Purchaser to purchase the Convertible Preferred Stock
at Closing. Subject to Section 5.1(b)(vii), all covenants contained herein
shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns.
1.46. Remedies . Purchaser, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at
law would be adequate. In any action or proceeding brought to enforce any
provision of this Agreement or where any provision hereof is validly asserted
as a defense, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy.
1.47. Section a. The section and other headings contained in this Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Agreement.
1.48. Severabil. In the event that any one or more of the provisions contained
in this Agreement shall be determined to be invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and enforceability of any
such provision or provisions in every other respect and the remaining
provisions of this Agreement shall not be in any way impaired.
1.49. Counterpa. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same instrument.
1.50. Publicity. Neither Purchaser nor Company shall issue any press release or
make any public disclosure regarding the transactions contemplated hereby
unless such press release or public disclosure is approved by the other party
in advance. Notwithstanding the foregoing, each of the parties hereto may, in
documents required to be filed by it with the SEC or other regulatory bodies,
make such statements with respect to the transactions contemplated hereby as
each may be advised by counsel is legally necessary or advisable, and may make
such disclosure as it is advised by its counsel is required by law.
1.51. Entire Ag. This Agreement, the exhibits and schedules hereto and the
Confidentiality Agreement, dated April 5, 1999 (the "Confidentiality
Agreement"), between Company and General Electric Capital Corporation (which
shall be deemed to apply to Purchaser), represent the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties, except
that, the Confidentiality Agreement shall remain in full force and effect.
1.52. Governing. This Agreement shall be governed by, construed and enforced in
accordance with, the laws of the State of New York without regard to the
principles thereof relating to conflict of laws. Each of the parties hereby
submits to personal jurisdiction and waives any objection as to venue in the
federal or state courts located in the County of New York, State of New York.
Service of process on the parties in any action arising out of or relating to
this Agreement shall be effective if mailed to the parties in accordance with
Section 10.1 hereof. The parties hereto waive all right to trial by jury in any
action or proceeding to enforce or defend any rights under this Agreement.
<PAGE>
IN WITNESS WHEREOF, Company and Purchaser have executed this
Agreement as of the day and year first above written.
TRANSIT GROUP, INC.
By: /s/ Philip A. Belyew
Name: Philip A. Belyew
Title: President and CEO
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Patrick Dowling
Name:Patrick Dowling
Title:
Exhibit 10.2
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of May 13, 1999 (this
"Agreement"), by and among Transit Group, Inc., a Florida corporation having an
office at 2859 Paces Ferry Road, Suite 1740, Atlanta, Georgia 30339,
("Company"), and those stockholders of Company set forth on Annex I hereto
(individually, a "Stockholder" and collectively, the "Stockholders").
W I T N E S S E T H :
WHEREAS, Company and GE Capital Equity Investments, Inc. ("GE
Capital" or "Purchaser") have entered into that certain Purchase Agreement,
dated as of May 13, 1999 (the "Purchase Agreement"), pursuant to which Company
has agreed to sell, and Purchaser has agreed to purchase, on the terms and
subject to the conditions set forth therein, shares of Series A Convertible
Preferred Stock, no par value per share ("Convertible Preferred Stock"), of
Company convertible into shares of common stock of Company, $.01 par value per
share ("Common Stock");
WHEREAS, each of the parties hereto (other than Company) are
on the date hereof holders of the number of shares of Convertible Preferred
Stock or Common Stock (all shares of Convertible Preferred Stock and Common
Stock being referred to herein collectively as "Stock") as is set forth on
Annex I hereto (such Stockholders, other than Purchaser and its successors and
assigns, the "Existing Stockholders"); and
WHEREAS, certain terms used in this Agreement are defined in
the Purchase Agreement;
NOW, THEREFORE, in consideration of the agreements, premises
and mutual covenants contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. Disposition of Stock.
(a) Restriction on Transfer of Stock. Each Existing Stockholder agrees that,
except in a transaction (or transactions) permitted by Section 1(b) or excepted
or contemplated by Section 2 below, such Existing Stockholder shall not during
the term of this Agreement either directly or indirectly, transfer, sell,
assign, mortgage, hypothecate, pledge, create a security interest in or lien
upon, encumber, donate, contribute, place in trust (excluding a voting trust),
or otherwise voluntarily or involuntarily dispose of (each, a "Transfer") any
of such Existing Stockholder's Stock.
(b) Permitted Dispositions of Stock. Each Existing Stockholder shall, without
regard to the provisions of Section 2 hereof, be entitled to directly or
indirectly Transfer all or any portion of its Stock (i) to any Affiliate of
such Existing Stockholder, (ii) pursuant to a will or the laws of descent and
distribution and (iii) in connection with the sale of all or substantially all
of the assets of Company or any merger or consolidation of Company with and
into another Person if such sale or merger is permitted under Section 5.2 of
the Purchase Agreement. (c) Condition Precedent to Permitted Dispositions. In
the event of any disposition to an Affiliate pursuant to Section 1(b)(i), the
transferee (and all subsequent transferees permitted pursuant to Section
1(b)(i)) shall be bound and obligated by, and shall be entitled to the rights
and benefits afforded to the Existing Stockholders under the terms and
provisions of, this Agreement. As a condition precedent to any disposition by
any Existing Stockholder of Stock permitted pursuant to Section 1(b)(i) above,
each purchaser, transferee or donee (other than an Existing Stockholder who is
already a party hereto) shall agree in writing to be bound by all of the
provisions and conditions of this Agreement and shall become an Existing
Stockholder hereunder, and no such purchaser, transferee or donee shall be
permitted to effect any transfer, sale or exchange of Stock which the Existing
Stockholders are not permitted to make under this Agreement. (d) Transfers in
Contravention of Agreement. Any purported Transfer of Stock by any Existing
Stockholder in contravention of this Agreement shall be null and void, and
Company agrees not to effectuate any such Transfer of Stock. 2. Tag-Along
Right.
(a) No Existing Stockholder shall directly or indirectly sell, transfer or
otherwise dispose of Stock, in a single transaction or related series of
transactions, to any third party (other than those Transfers permitted by
Section 1(b) hereof) unless the terms and conditions of such sale, transfer or
other disposition (the "Third Party Disposition") to such third party shall
contain an offer to Purchaser, to include in such Third Party Disposition such
number of shares of Common Stock or Convertible Preferred Stock as is
determined in accordance with Section 2(b) below; provided, however, that
Section 1 and this Section 2 shall not apply to any public sales by an Existing
Stockholder on the NASDAQ Stock Market or other securities exchange on which
the Common Stock may be listed or any redemptions of Stock by Company. At least
15 days prior to effecting any Third Party Disposition, such selling Existing
Stockholder (the "Selling Existing Stockholder") shall promptly cause the terms
and conditions of the Third Party Disposition to be reduced to a reasonably
detailed writing (which writing shall identify the third party purchaser and
shall include the offer to Purchaser to purchase or otherwise acquire its
Common Stock or Convertible Preferred Stock, as the case may be, according to
the terms and subject to the conditions of this Section 2), and shall deliver,
or cause the third party to deliver, written notice (the "Notice") of the terms
of such Third Party Disposition to Purchaser. The Notice shall be accompanied
by a true and correct copy of the agreement, if any, embodying the terms and
conditions of the proposed Third Party Disposition or such written summary
thereof if there is no agreement. At any time after receipt of the Notice (but
in no event later than 10 Business Days after receipt), Purchaser may accept
the offer included in the Notice for up to such number of its shares of Common
Stock or Convertible Preferred Stock, as the case may be, as determined in
accordance with the provisions of Section 2(b) below, by furnishing irrevocable
written notice of such acceptance to the Selling Existing Stockholder and to
the third party.
(b) In the event that Purchaser elects to accept the offer included in the
Notice described in Section 2(a) above, Purchaser (in such capacity, the
"Included Stockholder") shall have the right to sell, transfer or otherwise
dispose of such number of its shares of Common Stock (including Convertible
Preferred Stock) pursuant to, and upon consummation of, the Third Party
Disposition which is equal to the product of (X) the total number of shares of
Common Stock owned by the Included Stockholder (assuming for the purpose of
this calculation, the conversion of all shares of Convertible Preferred Stock)
and (Y) a fraction, the numerator of which shall equal the total number of
shares of Common Stock to be sold to the third party, and the denominator of
which shall equal the total number of shares of Common Stock owned by all
Stockholders (assuming for the purposes of this calculation, the conversion of
all shares of Convertible Preferred Stock). If the third party purchaser is not
willing to purchase such additional shares, the number of shares to be sold by
the Selling Existing Stockholder and the Included Stockholder shall be
proportionately reduced. (c) The purchase of Stock pursuant to this Section 2
shall be made on the same terms (including, without limitation, the per share
consideration and method of payment, and the date of sale, transfer or other
disposition), and subject to the same conditions, if any, as are provided to
the Selling Existing Stockholder and stated in the Notice. (d) Upon the
consummation of the disposition of Stock to the third party pursuant to the
Third Party Disposition, the Selling Existing Stockholder shall (i) cause the
third party to remit directly to the Included Stockholder the sales price of
its Stock disposed of pursuant thereto, and (ii) furnish such other evidence of
the completion and time of completion of the disposition and the terms thereof
as may reasonably be requested by the Included Stockholder. (e) If Purchaser
has not delivered to the Selling Existing Stockholder and to the third party
written notice of its acceptance of the offer contained in the Notice within 10
Business Days after the receipt of such Notice, it shall be deemed to have
waived any and all rights pursuant to this Section 3 with respect to the
disposition of its Stock described in the Notice, and the Selling Existing
Stockholder shall have 45 days (calculated from the first day next succeeding
the expiration of the 10 Business Day acceptance period described above), in
which to dispose of the aggregate amount of Stock described in the Notice to
the third party identified in the Notice, on terms not more favorable to the
Selling Existing Stockholder than those which were set forth in the Notice. If
Purchaser has delivered irrevocable written notice of acceptance as described
in the preceding sentence and, if after 45 days following receipt of the
Notice, the Selling Existing Stockholder and the third party shall not have
completed the disposition of Stock to be sold in connection therewith in
accordance with the terms of the Third Party Disposition, all the restrictions
on the disposition of Stock contained in this Section 2 shall again be in force
and effect. 3. Board Observer. GE Capital may designate one individual (the
"Observer") to attend all meetings of the Board of Directors (and any
committees thereof) in a non-voting observer capacity. The Observer shall be
subject to the Confidentiality Agreement, dated April 5, 1999, between GE
Capital and Company (the "Confidentiality Agreement"). The Observer shall be
entitled to receive all reports, presentations and materials as if the Observer
were a member of the Board, all of which shall be subject to the terms of the
Confidentiality Agreement. Company shall reimburse the Observer for any
reasonable expenses incurred in connection with meetings of the Board of
Directors and committees thereof.
4. Stockholders' Representations and Warranties. Each Stockholder represents
and warrants to each of the other Stockholders that there are no agreements to
which such Stockholder is a party with respect to the transfer of the capital
stock of Company or with respect to any other aspect of Company's affairs,
other than this Agreement.
5. Equitable Relief. It is hereby acknowledged that irreparable harm would
occur in the event that any of the provisions of this Agreement were not
performed fully by the parties hereto in accordance with the terms specified
herein, and that monetary damages are an inadequate remedy for breach of this
Agreement because of the difficulty of ascertaining and quantifying the amount
of damage that will be suffered by the parties relying hereon in the event that
the undertakings and provisions contained in this Agreement were breached or
violated. Accordingly, each party hereto hereby agrees that each other party
hereto shall be entitled to an injunction or injunctions to restrain, enjoin
and prevent breaches of the undertakings and provisions hereof and to enforce
specifically the undertakings and provisions hereof in any court of the United
States or any state having jurisdiction over the matter; it being understood
that such remedies shall be in addition to, and not in lieu of, any other
rights and remedies available at law or in equity. 6. Miscellaneous.
(a) Notices. Any and all notices, designations, consents, offers, acceptances,
or any other communication provided for herein shall be made in writing by
personal-delivery, first-class mail (registered or certified, with return
receipt requested), telecopier (with "answer back" confirmation), or overnight
air courier guaranteeing next day delivery in the case of Company, at its
address set forth at the beginning of this Agreement (Attn: Philip A. Belyew;
Telecopy No.: (770) 444-0246; with a copy to Womble, Carlyle, Sandridge & Rice,
PLLC, Suite 3500, One Atlantic Center, 1201 West Peachtree Street, Atlanta,
Georgia 30309, Attn: Sharon L. McBrayer, Esq., Telecopy No.: (404) 870-4825),
and in the case of any Stockholder, to the address of such party appearing
under its or his name on Annex I hereto (or to such other address as may be
designated in writing by any such party in accordance with this Section 7(a)).
Such notices or communications shall be effective and deemed given upon
delivery to said address.
(b) Complete Agreement; Amendment. This Agreement constitutes the complete
understanding of the parties with respect to its subject matter and supersedes
any other agreement or understanding relating thereto. No amendment, change or
modification of this Agreement shall be valid, binding or enforceable, unless
the same shall be in writing and signed by the Required Holders, the Company
and the Existing Stockholders to the extent their rights and obligations under
this Agreement would be affected thereby. (c) Termination. This Agreement may
be terminated at any time by an instrument in writing signed by Purchaser or,
if earlier, at such time as less than 30% of the shares of Convertible
Preferred Stock issued on the Closing Date are outstanding or if Purchaser and
its Affiliates fail to constitute the Required Holders. (d) Waiver. No failure
or delay on the part of the Stockholders or Company or any of them in
exercising any right, power or privilege hereunder, and no course of dealing
between the Stockholders or Company, shall operate as a waiver thereof nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude the simultaneous or later exercise of any other right, power or
privilege. The rights and remedies herein expressly provided are cumulative and
not exclusive of any rights and remedies which the Stockholders or Company
would otherwise have. (e) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument. (f) Governing Law;
Waivers. This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of New York without giving effect to the
conflict of laws provisions thereof. Each of the parties hereby submits to
personal jurisdiction and waives any objection as to venue in the County of New
York, State of New York. Service of process on the parties in any action
arising out of or relating to this Agreement shall be effective if mailed to
the parties in accordance with Section 6(a) hereof. The parties hereto waive
all right to trial by jury in any action or proceeding to enforce or defend any
rights hereunder. (g) Benefit and Binding Effect. All of the terms and
provisions of this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns, including any
permitted transferee of their Stock; provided, however, that any transferee
that is not an Affiliate of Purchaser and is acquiring less than 5% of the
Convertible Preferred Stock outstanding on the date of the original issuance of
the shares of Convertible Preferred Stock shall not receive the rights of
Purchaser under this Agreement. References herein to any Purchaser shall
include Purchaser and any of its successors and assigns. (h) Severability.
Whenever possible, each provision of this Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of this
Agreement. (i) After-Acquired Shares. All of the provisions of this Agreement
shall apply to all of the shares of capital stock of Company now owned or which
may be issued to or acquired by a Stockholder in consequence of any additional
issuance (including, without limitation, by exercise of an option or any
warrant), purchase, exchange, conversion or reclassification of stock,
corporate reorganization, or any other form of recapitalization, consolidation,
merger, stock split or stock dividend, or which are acquired by a Stockholder
in any other manner. (j) Approvals and Consents. The Stockholders hereby agree,
for themselves, their successors, heirs and legal representatives, to vote at
stockholders' and directors' meetings of Company, to prepare, execute and
deliver or cause to be prepared, executed and delivered such further
instruments and documents, to take such other actions and to adopt such by-laws
and provisions of the certificate of incorporation as may be reasonably
required to more effectively carry out the intent and purposes of this
Agreement and the transactions contemplated hereby. They further agree to cause
Company to do the same.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
TRANSIT GROUP, INC.
By: Philip A. Belyew
Name: Philip A. Belyew
Title: President
GE CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ Patrick Dowling
Name:Patrick Dowling
Title:
EXISTING STOCKHOLDERS:
/s/ T. Wayne Davis
T. Wayne Davis
/s/ Philip A. Belyew
Philip A. Belyew
<PAGE>
ANNEX I
Number
Stockholders/Purchaser Class of Securities of Shares
G E Capital Equity Investments, Inc. Convertible Preferred Stock ________
120 Long Ridge Road
Stamford, Connecticut 06927
Attn: GE Equity Group-Transit
Telecopy No. (203) 357-6426
with copies to:
General Electric
Capital Corporation
120 Long Ridge Road
Stamford, Connecticut 06927
Attn: GE Equity Group
Legal Counsel
Telecopy No. (203) 357-3047
and
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Ted S. Waksman, Esq.
Telecopy No. (212) 310-8007
<PAGE>
Number
Stockholders/Existing Stockholders Class of Securities of Shares
T. Wayne Davis Common Stock _________
1910 San Marco Blvd.
Jacksonville, Florida 32207
Telecopy No. ____________
Philip A. Belyew Common Stock _________
Suite 1740
2859 Paces Ferry Road
Atlanta, Georgia 30339
Telecopy No:____________
Exhibit 10.3
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of May 13, 1999, by
and between Transit Group, Inc., a Florida corporation ("Company"), and GE
Capital Equity Investments, Inc. ("GE Capital" or "Purchaser").
W I T N E S S E T H :
WHEREAS, Company and Purchaser have entered into that certain
Purchase Agreement, dated as of May 13, 1999 (the "Purchase Agreement"),
pursuant to which Company has agreed to issue and sell to Purchaser, and
Purchaser has agreed to purchase from Company, shares of Series A Convertible
Preferred Stock, no par value per share ("Convertible Preferred Stock"); and
WHEREAS, in order to induce Purchaser to enter into the
Purchase Agreement and to purchase such shares of Convertible Preferred Stock,
Company has agreed to provide registration rights with respect thereto;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, it is agreed as follows:
1. Definitions. Unless otherwise defined herein, terms defined in the Purchase
Agreement are used herein as therein defined, and the following shall have
(unless otherwise provided elsewhere in this Registration Rights Agreement) the
following respective meanings (such meanings being equally applicable to both
the singular and plural form of the terms defined):
"Agreement" shall mean this Registration Rights Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
"Business Day" shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency then administering the Securities Act
and other federal securities laws.
"Conversion Shares" shall mean shares of Common Stock issued
upon conversion of shares of Convertible Preferred Stock.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect from time to
time.
"Holder" shall mean the holder of Conversion Shares or shares
of Convertible Preferred Stock.
"Majority Holders" shall mean Holders holding at the time,
shares of Convertible Preferred Stock or Conversion Shares representing more
than 50% of the sum of (x) all then outstanding Conversion Shares and (y) all
shares of Common Stock issuable to the holders of then-outstanding Convertible
Preferred Stock upon the conversion thereof.
"NASD" shall mean the National Association of Securities
Dealers, Inc., or any successor corporation thereto.
"Registrable Securities" shall mean the shares of Common
Stock from time to time issued or issuable to the holders of the Convertible
Preferred Stock (i) upon the conversion thereof or (ii) hereafter acquired by
Purchaser as a dividend or other distribution with respect to, or in exchange
or replacement of, the securities referred to in subsection (i) or which it
hereafter obtains the right to acquire pursuant to the terms of the
Stockholders Agreement or otherwise.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
2. Required Registration. After receipt at any time after the date hereof of a
written request from the Holders of Registrable Securities requesting that
Company effect a registration under the Securities Act covering at least 30% of
the Registrable Securities initially outstanding, and specifying the intended
method or methods of disposition thereof, Company shall promptly notify all
Holders in writing of the receipt of such request and each such Holder, in lieu
of exercising its rights under Section 3 may elect (by written notice sent to
Company within 10 Business Days from the date of such Holder's receipt of the
aforementioned Company's notice) to have Registrable Securities included in
such registration thereof pursuant to this Section 2. Thereupon Company shall,
as expeditiously as is possible, use its best efforts to effect the
registration under the Securities Act of all shares of Registrable Securities
which Company has been so requested to register by such Holders for sale, all
to the extent required to permit the disposition (in accordance with the
intended method or methods thereof, as aforesaid) of the Registrable Securities
so registered; provided, however, that Company shall not be required to effect
more than three (3) registrations of any Registrable Securities pursuant to
this Section 2 unless Company shall be eligible at any time to file a
registration statement on Form S-3 (or other comparable short form) under the
Securities Act, in which event there shall be no limit on the number of such
registrations pursuant to this Section 2.
3. Incidental Registration. If Company at any time proposes to file on its
behalf and/or on behalf of any of its security holders (the "demanding security
holders") a Registration Statement under the Securities Act on any form (other
than a Registration Statement on Form S-4 or S-8 or any successor form for
securities to be offered in a transaction of the type referred to in Rule 145
under the Securities Act or to employees of Company pursuant to any employee
benefit plan, respectively, or to register debt securities) for the general
registration of securities, it will give written notice to all Holders at least
30 days before the initial filing with the Commission of such Registration
Statement, which notice shall set forth the intended method of disposition of
the securities proposed to be registered by Company. The notice shall offer to
include in such filing the aggregate number of shares of Registrable Securities
as such Holders may request.
Each Holder desiring to have Registrable Securities
registered under this Section 3 shall advise Company in writing within 10
Business Days after the date of receipt of such offer from Company, setting
forth the amount of such Registrable Securities for which registration is
requested. Company shall thereupon include in such filing the number of shares
of Registrable Securities for which registration is so requested, subject to
the next sentence, and shall use its best efforts to effect registration under
the Securities Act of such shares. If the managing underwriter of a proposed
public offering shall advise Company in writing that, in its opinion, the
distribution of the Registrable Securities requested to be included in the
registration concurrently with the securities being registered by Company or
such demanding security holder would materially and adversely affect the
distribution of such securities by Company or such demanding security holder,
then all selling security holders (including the demanding security holder who
initially requested such registration, but excluding Company) shall reduce the
amount of securities each intended to distribute through such offering on a pro
rata basis. Except as otherwise provided in Section 5, all expenses of such
registration shall be borne by Company.
4. Registration Procedures. If Company is required by the provisions of Section
2 or 3 to use its best efforts to effect the registration of any of its
securities under the Securities Act, Company will, as expeditiously as
possible:
(a) prepare and file with the Commission a Registration Statement with respect
to such securities and use its best efforts to cause such Registration
Statement to become and remain effective for a period of time required for the
disposition of such securities by the holders thereof, but not to exceed 180
days;
(b) prepare and file with the Commission such amendments and supplements to
such Registration Statement and the prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective and to comply
with the provisions of the Securities Act with respect to the sale or other
disposition of all securities covered by such Registration Statement until the
earlier of such time as all of such securities have been disposed of in a
public offering or the expiration of 180 days; (c) furnish to such selling
security holders such number of copies of a summary prospectus or other
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such selling
security holders may reasonably request; (d) use its best efforts to register
or qualify the securities covered by such Registration Statement under such
other securities or blue sky laws of such jurisdictions within the United
States and Puerto Rico as each holder of such securities shall request
(provided, however, that Company shall not be obligated to qualify as a foreign
corporation to do business under the laws of any jurisdiction in which it is
not then qualified or to file any general consent to service or process), and
do such other reasonable acts and things as may be required of it to enable
such holder to consummate the disposition in such jurisdiction of the
securities covered by such Registration Statement; (e) furnish, at the request
of any Holder requesting registration of Registrable Securities pursuant to
Section 2, on the date that such shares of Registrable Securities are delivered
to the underwriters for sale pursuant to such registration or, if such
Registrable Securities are not being sold through underwriters, on the date
that the Registration Statement with respect to such shares of Registrable
Securities becomes effective, (1) an opinion, dated such date, of the
independent counsel representing Company for the purposes of such registration,
addressed to the underwriters, if any, and if such Registrable Securities are
not being sold through underwriters, then to the Holders making such request,
in customary form and covering matters of the type customarily covered in such
legal opinions; and (2) a comfort letter dated such date, from the independent
certified public accountants of Company, addressed to the underwriters, if any,
and if such Registrable Securities are not being sold through underwriters,
then to the Holder making such request and, if such accountants refuse to
deliver such letter to such Holder, then to Company, in a customary form and
covering matters of the type customarily covered by such comfort letters and as
the underwriters or such Holder shall reasonably request. Such opinion of
counsel shall additionally cover such other legal matters with respect to the
registration in respect of which such opinion is being given as such Holders
may reasonably request. Such letter from the independent certified public
accountants shall additionally cover such other financial matters (including
information as to the period ending not more than five Business Days prior to
the date of such letter) with respect to the registration in respect of which
such letter is being given as the Holders of a majority of the Registrable
Securities being so registered may reasonably request; (f) enter into customary
agreements (including an underwriting agreement in customary form) and take
such other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities; and (g) otherwise
use its best efforts to comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as soon as reasonably
practicable, but not later than 18 months after the effective date of the
Registration Statement, an earnings statement covering the period of at least
12 months beginning with the first full month after the effective date of such
Registration Statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act.
It shall be a condition precedent to the obligation of
Company to take any action pursuant to this Agreement in respect of the
securities which are to be registered at the request of any Holder that such
Holder shall furnish to Company such information regarding the securities held
by such Holder and the intended method of disposition thereof as Company shall
reasonably request and as shall be required in connection with the action taken
by Company. The participation of a Holder in any registration hereunder which
is underwritten shall be contingent upon (a) the agreement of such Holder to
sell its Common Stock on the basis provided in any underwriting arrangements
approved by the Holders of a majority of the Registrable Securities in the case
of an underwritten offering under Section 2 hereof, or by Company in the case
of an underwritten offering under Section 3 hereof; and (b) the completion and
execution by such Holder of all customary questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements; provided, however, that (x)
any representations and warranties of a Holder in any such documents shall be
applicable solely to such Holder and (y) any indemnification of the
underwriters by a Holder under any underwriting arrangements shall be only to
the extent of the indemnification provided by such Holder to Company in this
Agreement.
5. Expenses. All expenses incurred in complying with this Agreement, including,
without limitation, all registration and filing fees (including all expenses
incident to filing with the NASD), printing expenses, fees and disbursements of
counsel for Company, the reasonable fees and expenses of one counsel for the
selling security holders (selected by those holding a majority of the shares
being registered), expenses of any special audits incident to or required by
any such registration and expenses of complying with the securities or blue sky
laws of any jurisdiction pursuant to Section 4(d), shall be paid by Company,
except that:
(a) all such expenses in connection with any amendment or supplement to the
Registration Statement or prospectus filed more than 180 days after the
effective date of such Registration Statement because any Holder has not
effected the disposition of the securities requested to be registered shall be
paid by such Holder; and
(b) Company shall not be liable for any fees, discounts or commissions to any
underwriter or any fees or disbursements of counsel for any underwriter in
respect of the securities sold by such Holder.
6. Indemnification and Contribution.
(a) In the event of any registration of any Registrable Securities under the
Securities Act pursuant to this Agreement, Company shall indemnify and hold
harmless the holder of such Registrable Securities, such holder's directors and
officers, and each other person (including each underwriter) who participated
in the offering of such Registrable Securities and each other person, if any,
who controls such holder or such participating person within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such holder or any such director or officer or participating
person or controlling person may become subject under the Securities Act or any
other statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any alleged untrue statement of any material fact contained, on the effective
date thereof, in any Registration Statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse such holder or such director, officer or participating person or
controlling person for any legal or any other expenses reasonably incurred by
such holder or such director, officer or participating person or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that Company shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any actual or alleged untrue statement
or actual or alleged omission made in such Registration Statement, preliminary
prospectus, prospectus or amendment or supplement in reliance upon and in
conformity with written information furnished to Company by such holder
specifically for use therein or (in the case of any registration pursuant to
Section 2) so furnished for such purposes by any underwriter. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of such holder or such director, officer or participating person
or controlling person, and shall survive the transfer of such securities by
such holder.
(b) Each Holder, by acceptance hereof, agrees to indemnify and hold harmless
Company, its directors and officers and each other person, if any, who controls
Company within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which Company or any such director
or officer or any such person may become subject under the Securities Act or
any other statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
information in writing provided to Company by such Holder specifically for use
in the following documents and contained, on the effective date thereof, in any
Registration Statement under which securities were registered under the
Securities Act at the request of such holder, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereto.
Notwithstanding the provisions of this paragraph (b) or paragraph (c) below, no
Holder shall be required to indemnify any person pursuant to this Section 6 or
to contribute pursuant to paragraph (c) below in an amount in excess of the
amount of the aggregate net proceeds received by such Holder in connection with
any such registration under the Securities Act. (c) If the indemnification
provided for in this Section 6 from the indemnifying party is unavailable to an
indemnified party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified parties in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
parties shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(c) were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
Any person entitled to indemnification hereunder will (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification; and (ii) permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. An indemnifying party will not be subject to any liability
for any settlement made by the indemnified party without its consent, such
consent to be not unreasonably withheld. Any indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless
counsel to the indemnified parties shall have reasonably concluded that there
may be defenses available to such indemnified party that are different from or
additional to those available to one or more of the other indemnified parties
and that separate counsel for such party is prudent under the circumstances.
7. Certain Limitations on Registration Rights. Notwithstanding the other
provisions of this Agreement:
(a) Company shall not be obligated to register the Registrable Securities of
any Holder if, in the opinion of counsel to Company reasonably satisfactory to
the Holder and its counsel (or, if the Holder has engaged an investment banking
firm, to such investment banking firm and its counsel), the sale or other
disposition of such Holder's Registrable Securities, in the manner proposed by
such Holder (or by such investment banking firm), may be effected without
registering such Registrable Securities under the Securities Act; and
(b) Company shall not be obligated to register the Registrable Securities of
any Holder pursuant to Section 2 if Company has had a registration statement,
under which such Holder had a right to have its Registrable Securities included
pursuant to Section 2 or 3, declared effective within six months prior to the
date of the request pursuant to Section 2. (c) Company shall have the right to
delay and/or suspend the filing or effectiveness of a registration statement
required pursuant to Section 2 hereof during one or more periods aggregating
not more than 90 days in any twelve-month period in the event that (i) Company
would, in accordance with the advice of its counsel, be required to disclose in
the prospectus information not otherwise then required by law to be publicly
disclosed and (ii) in the judgment of Company's Board of Directors, there is a
reasonable likelihood that such disclosure, or any other action to be taken in
connection with the prospectus, would materially and adversely affect any
existing or prospective material business situation, transaction or negotiation
or otherwise materially and adversely affect Company. 8. Selection of Managing
Underwriters. The managing underwriter or underwriters for any offering of
Registrable Securities to be registered pursuant to Section 2 shall be a
nationally recognized investment banking firm selected by the holders of a
majority of the shares being so registered and shall be reasonably acceptable
to Company.
9. Restrictions on Sale After Public Offering. Except for transfers made in
transactions exempt from the registration requirements under the Securities Act
(other than Rule 144 thereunder), Company and each Holder hereby agree not to
offer, sell, contract to sell or otherwise dispose of any of their Registrable
Securities within 180 days after the date of any final prospectus relating to
any underwritten public offering of Common Stock, whether by Company or by any
Holders, except pursuant to such prospectus or with the written consent of the
managing underwriter or underwriters for such offering. 10. Miscellaneous. (a)
No Inconsistent Agreements. Company will not hereafter enter into any agreement
with respect to its securities which is inconsistent with the rights granted to
the Holders in this Agreement. Company has not previously entered into any
agreement with respect to any of its securities granting any registration
rights to any person, but is not restricted from entering into any such
agreement or offering any other stockholder of Company the right to include
shares of Common Stock in any registration of shares by Company; provided,
however, that if a Holder requests a registration pursuant to Section 2 hereof,
any required reductions by an underwriter of the type set forth in Section 3
hereof in the aggregate amount of shares to be registered shall first reduce
only the shares requested to be registered by persons other than the Holders.
(b) Remedies. Each Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. Company agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of this Agreement and hereby agrees to waive the
defense in any action for specific performance that a remedy at law would be
adequate. In any action or proceeding brought to enforce any provision of this
Agreement or where any provision hereof is validly asserted as a defense, the
successful party shall be entitled to recover reasonable attorneys' fees in
addition to any other available remedy. (c) Amendments and Waivers. Except as
otherwise provided herein, the provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to departure from the
provisions hereof may not be given unless Company has obtained the written
consent of the Majority Holders. (d) Notice Generally. Any notice, demand,
request, consent, approval, declaration, delivery or other communication
hereunder to be made pursuant to the provisions of this Agreement shall be
sufficiently given or made if in writing and either delivered in person with
receipt acknowledged or sent by registered or certified mail, return receipt
requested, postage prepaid, or by telecopy and confirmed by telecopy
answerback, addressed as follows: (i) If to any Holder, at its last known
address appearing on the books of Company maintained for such purpose.
(ii) If to Company, at
2859 Paces Ferry Road
Suite 1740
Atlanta, GA 30339
Attention: President
Telecopy Number: (770) 444-0246
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, telecopied and confirmed by telecopy
answerback or three Business Days after the same shall have been deposited in
the United States mail.
(e) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto including
any person to whom Registrable Securities are transferred.
(f) Headings. The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof. (g) Governing
Law; Jurisdiction. This Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of New York without giving effect to
the conflict of laws provisions thereof. Each of the parties hereby submits to
personal jurisdiction and waives any objection as to venue in the County of New
York, State of New York. Service of process on the parties in any action
arising out of or relating to this Agreement shall be effective if mailed to
the parties in accordance with Section 10(d) hereof. The parties hereto waive
all right to trial by jury in any action or proceeding to enforce or defend any
rights hereunder. (h) Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement. (i) Entire Agreement. This Agreement, together with the
Purchase Agreement, represents the complete agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
TRANSIT GROUP, INC.
By:/s/Philip A. Belyew
Name:Philip A. belyew
Title:President
GE CAPITAL EQUITY INVESTMENTS, INC.
By:/s/ Patrick Dowling
Name:Patrick Dowling
Title:
Exhibit 99.1
Transit Group Issues Five Million Shares of Convertible Preferred Stock
to GE Equity in a $25 Million Equity Transaction
May 13, 1999 5:30 PM EDT
ATLANTA--(BUSINESS WIRE)--May 13, 1999--Transit Group, Inc. (Nasdaq Small Cap:
TRGP), trucking company consolidators, today announced that it has completed an
equity financing transaction with GE Equity, the private equity arm of General
Electric Company. In the transaction, Transit Group has issued to GE Equity
five million shares of convertible preferred stock.
"We believe this is truly a milestone event in the ongoing development and
growth of our Company," commented Philip A. Belyew, President and Chief
Executive Officer of Transit Group. "The funds provided by this transaction
increase our capital base to more than $75 million -- up approximately 50% from
year end 1998 -- and strengthen our ongoing expansion program by enhancing our
financial flexibility to pursue combination cash-and-stock acquisition
opportunities.
"While the financial significance of this transaction is important to future
operations, our new relationship with GE Equity also is meaningful in more
subjective ways," Belyew continued. "Their equity participation in Transit
Group signals strong outward support for our corporate strategy, and we
recognize the confidence they place in our Company, its management, and its
future," he said.
Belyew noted that Transit Group has completed 14 acquisitions during the past
two years, including three thus far in 1999. These acquisitions have increased
the Company's annualized revenues base to more than $300 million. For the year
ended December 31, 1998, Transit Group reported total revenues of approximately
$178 million.
In addition to the greater financial resources now available to Transit Group
with the completion of this equity transaction, the Company also has increased
capacity to issue shares in future acquisition transactions. At yesterday's
annual meeting, the Company's stockholders approved Transit Group's amended and
restated articles of incorporation which increase the number of common and
preferred shares authorized for issuance. With today's announced preferred
stock transaction, Transit Group has approximately 26 million common shares and
five million preferred shares outstanding. The Company's amended and restated
articles of incorporation now increase those limits to 100 million and 30
million, respectively, and thereby greatly expand the Company's capacity to
continue to pursue stock-based acquisitions similar to the 14 transactions
completed to date.
About Transit Group
<PAGE>
Transit Group, headquartered in Atlanta, Georgia, is a holding company in the
business of acquiring and consolidating short-, medium- and long-haul trucking
companies, particularly truckload carriers. Trucking companies that operate as
divisions of Transit Group are located in Alabama, Florida, Indiana, Kentucky,
Mississippi, New York, North Carolina, and Canada, and comprise a fleet of
approximately 1,600 company trucks, 500 owner operators, and 4,300 trailers,
serving customers throughout the U.S. and in Canada.
About GE Equity
GE Equity, a subsidiary of GE Capital, is the private equity arm of GE. GE
Capital, with assets of more than US$300 billion, is a global, diversified
financial services company with 28 specialized businesses. A wholly-owned
subsidiary of General Electric Company, GE Capital, based in Stamford, CT,
provides equipment management, mid-market and specialized financing, specialty
insurance and a variety of consumer services, such as car leasing, home
mortgages and credit cards, to businesses and individuals around the world. GE
is a diversified manufacturing, technology and services company with operations
worldwide.
Comments in this news release regarding the Company's business which are not
historical facts are forward looking statements that involve risks and
uncertainties. Among these risks are that the Company is in a highly
competitive business, has a history of operating losses, is pursuing a growth
strategy that relies in part on the completion of acquisitions of companies in
the trucking industry, and will continue to be able to obtain favorable credit
terms. There can be no assurance, considering these and other risks, that the
Company's revenue and operating profitability will continue to meet
management's current expectations and that the Company will successfully
improve its revenue and operating profitability or consummate future
acquisitions.
