<PAGE> 1
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):
NOVEMBER 1, 1999
USA TRUCK, INC.
(Exact name of registrant as specified in is charter)
<TABLE>
<S> <C> <C>
Delaware 000-19858 71-0556971
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
</TABLE>
3200 Industrial Park Road, Van Buren, Arkansas 72956
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(501) 471-2500
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On November 1, 1999, pursuant to an Asset Purchase Agreement (the
"Asset Purchase Agreement") dated October 31, 1999, USA Truck, Inc. (the
"Registrant"), a Delaware corporation, acquired substantially all the assets of
CARCO Carrier Corporation, an Arkansas corporation, which operated under the
name CCC Express, Inc. ("CCC"), for a purchase price of $35,300,000. The
purchase price, which is subject to certain post-closing adjustments, consisted
of (i) a cash payment of approximately $3.0 million; (ii) the assumption of
approximately $6.5 million of liabilities including equipment notes held by Bank
Boston, Mellon U.S. Leasing and Banc of America Leasing & Capital LLC and (iii)
the refinancing with Banc One Leasing Corporation and Deposit Guaranty National
Bank of approximately $25.8 million in other debt secured by equipment. The cash
portion of the purchase price was paid with available cash and proceeds of
borrowings under the Registrant's credit facilities with Deposit Guaranty
National Bank. The purchase price was equal to the net book value of CCC on the
closing date, as adjusted in accordance with the Asset Purchase Agreement, plus
$2.0 million. In connection with the acquisition, the Registrant's borrowing
limit under its General Line of Credit with Deposit Guaranty National Bank was
increased from $20.0 million to $35.0 million effective October 28, 1999.
The acquired operations include a fleet of 498 tractors and 1,103 dry
van trailers, which the Registrant will use in its truckload motor carrier
business. The Registrant is, and before the acquisition CCC was, a motor carrier
engaged in common and contract carriage of truckload quantities of general
commodities. The acquisition represents an increase of 43% in the tractor fleet
of the Registrant, which operated 1,149 tractors and 2,266 dry van trailers
before the transaction. As part of the transaction, the Registrant also assumed
three leases for dedicated shop and fuel facilities.
The foregoing is qualified by reference to the Asset Purchase
Agreement, the form of which is filed as an exhibit to this Report and
incorporated herein by reference.
-2-
<PAGE> 3
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of businesses being acquired.
(b) Pro forma financial information.
The historical financial statements and information of CCC
required by Item 7(a) and the pro forma financial statements
and information required by Item 7(b) will be filed by
amendment to this Report no later than 60 days after the date
on which this Report is required to be filed.
(c) Exhibits.
Exhibit 2.1: Form of Asset Purchase Agreement
dated as of October 31, 1999 between
the Registrant, as buyer, and CARCO
Carrier Corporation doing business
as CCC Express, Inc., as seller, and
CARCO Capital Corporation.
-3-
<PAGE> 4
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 12, 1999 USA Truck, Inc.
By: /s/ Jerry D. Orler
-----------------------------------
Jerry D. Orler
Vice President - Finance and
Chief Financial Officer
-4-
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Exhibit
------- -------
<S> <C>
2.1 Form of Asset Purchase Agreement dated as of
October 31, 1999 between the Registrant, as
buyer, and CARCO Carrier Corporation doing
business as CCC Express, Inc., as seller and
CARCO Capital Corporation.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made by and between
USA Truck, Inc., a Delaware corporation (the "Purchaser"), CARCO Carrier
Corporation, an Arkansas corporation doing business as CCC Express, Inc. (the
"Seller") and CARCO Capital Corporation, an Arkansas corporation ("CARCO").
R E C I T A L S
A. Seller is engaged in the transportation of goods in interstate
and intrastate commerce as a common carrier and contract
carrier pursuant to various permits issued by the Surface
Transportation Board and various state agencies regulating
motor carrier operations (the "Business").
B. Purchaser desires to acquire from Seller and Seller is
agreeable to selling all of the assets necessary to operate
the Business except cash and accounts receivable upon the
terms and conditions stated herein. The parties have entered
into a statement of intent describing the transactions set
forth herein which is merged into this Agreement and is
without independent force and affect.
I. DEFINITIONS
As used in this Agreement, the terms identified in this Article shall
have the meanings indicated unless a different and common meaning of the term is
clearly indicated by the context.
1.01 "Agreement" means this Asset Purchase Agreement.
1.02 "Assumed Rental Agreements" means the rental agreements assumed by
Purchaser in Schedule 2.1.8.
1.03 "Assumed Liabilities" means the liabilities described in Section
2.03.
<PAGE> 2
1.04 "CARCO" means CARCO Capital Corporation, an Arkansas corporation.
1.05 "Closing" means the completion of the transactions contemplated by
this Agreement.
1.06 "Closing Balance Sheet" means the Balance Sheet attached hereto as
Schedule 2.2.1 as adjusted as of the Closing Date as provided in Section 2.
1.07 "Closing Date" means the date specified in Section 2.05 on which
the closing actually occurs.
1.08 "Code" means the Internal Revenue Code of 1986 as amended and in
effect at the time of the execution of this Agreement.
1.09 "ERISA" means the Employee Retirement Income Security Act of 1974
as amended and in effect at the time of the execution of this Agreement.
1.10 "Excluded Assets" means the assets that are not sold to Purchaser
as described in Section 2.09.
1.11 "First Adjustment Date" means the date specified in Section
2.02(a) on which the purchase price is adjusted.
1.12 "First Post Closing Adjustment" means the change in the Purchase
Price described in Section 2.02(a).
1.13 "Freight Contracts" means contracts between Seller and its
customers for the transportation of freight described in Section 2.01(f).
1.14 "GAAP" means generally accepted accounting principles in effect on
the date of any statement, report or determination that purports to be or is
required to be prepared or made in accordance with GAAP.
2
<PAGE> 3
1.15 "Inventory" means the items described in Section 2.01(d).
1.16 "Notes Receivable" means the obligations payable to Seller
described in Section 2.01(c).
1.17 "Notice of Claims" means the Notice described in Sections 10.04
and 10.06.
1.18 "Notice of Objection" means the Notice described in Sections 10.04
and 10.06.
1.19 "Owner Operator Contracts" means the owner operator agreements in
Schedule 2.1.9.
1.20 "Parties" means Seller, Purchaser and CARCO.
1.21 "Purchased Assets" means the assets described in Section 2.01.
1.22 "Purchase Price" means the consideration paid for the Purchased
Assets in the amount determined in Section 2.02.
1.23 "Purchaser" means USA Truck, Inc., a Delaware corporation.
1.24 "Purchasers Indemnified Losses" means the losses subject to
indemnification by Seller in Section 10.01.
1.25 "Related Agreements" means the agreements described in Section
2.08.
1.26 "Second Adjustment Date" means the date described in Section
2.02(b) on which the purchase price is adjusted.
1.27 "Second Post Closing Adjustment" means the change in the Purchase
Price described in Section 2.02(b).
1.28 "Seller" means CARCO Carrier Corporation, an Arkansas corporation,
doing business as CCC Express, Inc.
1.29 "Seller and its Affiliates" means Seller, CARCO and subsidiary
corporations that are
3
<PAGE> 4
owned 80% or more by CARCO.
1.30 "Sellers Indemnified Losses" means the losses subject to
indemnification by Purchaser in Section 10.03.
1.31 "Warranty Termination Date" means the date specified in Section
10.06 when a party's right to be indemnified for losses expires.
II. THE TRANSACTIONS
2.01 Sale of Assets. Subject to the terms and conditions herein stated,
the Seller agrees to sell, assign, transfer and convey to Purchaser on the
Closing Date and the Purchaser agrees to purchase from the Seller good and
merchantable title to substantially all of the tangible and intangible assets
necessary to operate the Business, except the Excluded Assets (the "Purchased
Assets") described as follows:
(a) Transport Equipment. Seller's power units, Qualcom
Communications Equipment, trailers described in Schedule 2.1.1.
(b) Furniture and Equipment. Seller's office furniture and
equipment and shop equipment described in Schedule 2.1.2.
(c) Notes Receivable. Seller's notes receivable from owner
operators described in Schedule 2.1.3.
(d) Inventory. Seller's inventory of parts, fuel, and supplies
in Schedule 2.1.4.
(e) Records. Seller's customer data, sales records,
maintenance and warranty records and personnel records, subject to access by
Seller as needed.
(f) Freight Contracts. Seller's freight contracts described in
Schedule 2.1.5.
4
<PAGE> 5
(g) Goodwill. The Intangible Assets described in Section 2.1.6
including Seller's name, CARCO Carrier Corporation and CCC Express, Inc. and all
variations thereof. The right to solicit for employment all of Seller's
employees. The assets described in the Closing Balance Sheet.
(h) Operating Authority. Seller's authority to operate as a
motor carrier in intrastate and interstate commerce as described in Schedule
2.1.7.
(i) Service Agreements. All of Seller's service agreements,
warranties and other rights with regard to the Transportation Equipment that are
transferrable to Purchaser.
(j) Rental Agreements. The real property Rental Agreements
described in Schedule 2.1.8 (the "Rental Agreements").
(k) Licenses and Fees. All prepaid vehicle licenses and
Federal Highway Use Tax on tractors.
(l) Owner Operator Contracts. The Contractor Operating
Agreements in Schedule 2.1.9 (the "Owner Operator Contracts").
(m) Deposits. The Pet Deposits and the Texas Star Deposit is
Schedule 2.1.10.
2.02 Purchase Price. In consideration for the sale, assignment,
conveyance and delivery of the Purchased Assets by Seller, Purchaser, in
reliance upon the representations and warranties in Article VII, will pay to
Seller on the Closing Date, the net book value on the Closing Balance Sheet plus
$2,000,000.
(a) First Post Closing Adjustment. The First Post Closing
Adjustment to the Purchase Price shall be effective on the Closing Date (the
"First Adjustment Date"). Purchaser shall substitute actual amounts for driver
advances, inventory, shop tools and non-capitalized shop
5
<PAGE> 6
equipment, owner operator escrow, Notes Receivables and driver pet deposits for
the estimated amounts in the Closing Balance Sheet. The revised Closing Balance
Sheet shall be delivered to Seller within 50 days after the Closing Date. Seller
shall have a claim for indemnification against Purchaser for any under payment
of the Purchase Price resulting from the First Post Closing Adjustment.
Purchaser shall have a claim for indemnification against Seller for any
overpayment of the Purchase Price resulting from the First Post Closing
Adjustment. Claims for indemnification shall be presented and paid as provided
in Article X.
(b) Second Post Closing Adjustment. The Second Post Closing
Adjustment to the Purchase Price shall be effective on the first anniversary of
the Closing Date (the "Second Post Closing Adjustment Date"). Purchaser shall
substitute actual amounts for estimated amounts in the Closing Balance Sheet
(after the First Post Closing Adjustment) for: (i) collision damage claims made
within 60 days after the Closing Date; (ii) cargo claims made within 9 months
after the Closing Date; and (iii) vacation expense occurring within 12 months
after the Closing Date. The revised Closing Balance Sheet shall be delivered to
Seller within 370 days after the Closing Date. Seller shall have a claim for
indemnification against Purchaser for any underpayment of the Purchase Price
resulting from the Second Post Closing Adjustment. Purchaser shall have a claim
for indemnification against Seller for any overpayment of the Purchase Price
resulting from the Second Post Closing Adjustment. Claims for indemnification
shall be presented and paid as provided in Article X.
(c) Closing Balance Sheet. The balance sheet attached hereto
as Schedule 2.2.1 shall be adjusted as of the Closing Date to reflect: (i)
discrepancies between the assets delivered by Seller at Closing and the
Purchased Assets described herein; (ii) changes in the accounts arising from
6
<PAGE> 7
operations between the date of the Balance Sheet in Schedule 2.2.1 and the
Closing Date; and (iii) changes in the accounts arising from adjusting estimated
balances to actual balances. The Balance Sheet in Schedule 2.2.1 as adjusted
will be the "Closing Balance Sheet".
2.03 Liabilities. The Purchaser shall not assume any liabilities of
Seller, whether related to the Business or not, or to any of the Purchased
Assets except Purchaser will assume: (i) the liabilities shown on the Closing
Balance Sheet as adjusted in Sections 2.02(a) and 2.02(b); and (ii) the
liabilities shown in Schedule 2.3.1 (collectively the "Assumed Liabilities").
2.04 Guaranty. CARCO hereby guarantees the prompt and complete payment
and performance of every obligation of Seller in this Agreement pursuant to the
terms of the guaranty attached hereto as Schedule 2.4.1.
2.05 Closing. The Closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Purchaser, 3200
Industrial Park Road, Van Buren, Arkansas, commencing at 9:00 a.m. local time on
the second business day following satisfaction or waiver of all conditions in
Article III and Article IV or at such other date as the parties may determine
(the "Closing Date").
2.06 Delivery at Closing. At Closing, the Seller shall deliver to
Purchaser: (i) the Disclosure Schedule certified by Seller; (ii) the
certificates, opinions and documents described in Article III; and (iii) the
assignment, bills of sale, lease assumption agreements, titles and other
instruments necessary to convey the Purchased Assets to the Purchaser described
in Schedule 2.6.1.
At Closing, the Purchaser shall deliver to Seller: (i) the Purchase
Price; (ii) the certificates, opinions and documents described in Article IV;
and (iii) instruments of assumption as counsel for
7
<PAGE> 8
Seller may reasonably request as evidence that Purchaser will satisfy the
Assumed Liabilities.
2.07 Allocation. The parties agree to allocate the Purchase Price among
the Purchased Assets for financial accounting and tax purposes as provided in
Schedule 2.7.1.
2.08 Related Agreements. In connection with the sale of the Purchased
Assets, certain agreements with third parties (collectively the "Related
Agreements") have been negotiated as follows:
(a) Non-Competition Agreement. At Closing, Purchaser will
enter into an agreement with Carl D. Corley restricting Mr. Corley from
competing with Seller and employing Mr. Corley as a consultant to Seller for a
period of 5 years as provided in the agreement attached hereto as Schedule
2.8.1.
(b) Lease Agreements. At Closing, Purchaser will enter into
rental agreements assuming the rights of Seller to rent on a month to month
basis, the facilities at New Paris, Indiana, Springhill, Louisiana and
Fayetteville, North Carolina, Houston, Texas and North Ridgefield, Ohio.
(c) Freight Contracts. Seller shall obtain and deliver to
Purchaser at Closing, written consent for Seller to transfer to Purchaser the
contracts described in Schedule 2.1.5 Sections I and II (the "Freight
Contracts"). The Seller shall deliver to Purchaser at Closing written
certification that the Freight Contracts are in full force and effect and that
no defaults have occurred by the shipper or Seller.
2.09 Excluded Assets. Seller's cash, accounts receivable generated
through Closing Date, subrogation claims for damage to Purchased Assets through
the Closing Date, CARCO International notes receivable, trade name CARCO
Rentals, Inc., trade name CARCO Capital Corporation, prepaid
8
<PAGE> 9
insurance, prepaid fuel tax, and assets that are not included in the Closing
Balance Sheet or the Schedules to this Agreement. (the "Excluded Assets").
III. CONDITIONS TO OBLIGATIONS OF PURCHASER
Each and every obligation of Purchaser under this Agreement is, unless
waived in writing by Purchaser, subject to satisfaction on or before the Closing
Date of each of the following conditions:
3.01 Representations. The representations of Seller in this Agreement
or in any schedule hereto or in the Disclosure Statement shall be true and
correct on and as of the Closing Date and Seller shall have delivered to
Purchaser on the Closing Date a certificate to such effect.
3.02 Opinion of Counsel. Purchaser shall have received the opinion,
dated the Closing Date, of Hardin, Jesson and Terry, Attorneys at Law, who are
legal counsel to Seller and CARCO with regard to the matters set forth in
Schedule 3.2.1.
3.03 Performance. Seller shall have conducted the Business as provided
in Article V and substantially performed and complied with all of the other
terms and conditions required by this Agreement to be performed and satisfied by
Seller at or prior to the Closing Date and Seller shall have delivered to
Purchaser on the Closing Date a certificate to such effect.
3.04 Assets, Books and Records. Seller shall have made available to
Purchaser access to all of its books and records.
3.05 Third Party Consent. Seller shall have procured all third party
consents specified in Schedule 3.5.1.
3.06 Litigation. There shall not be threatened or pending actions,
suits or proceedings before any court or quasi-judicial or administrative agency
of any federal, state, local or foreign
9
<PAGE> 10
jurisdiction wherein an unfavorable judgment, decree, order, stipulation,
injunction or charge would: (i) prevent consummation of any of the transactions
contemplated by this Agreement; (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation; or (iii) affect
aversely the right of the Purchaser to own, operate or control the Purchased
Assets or the Business.
3.07 Due Diligence Review. Purchaser shall have completed a due
diligence review of Seller and the Purchased Assets with results that are
satisfactory to Purchaser.
3.08 Related Agreements. Purchaser shall have obtained the Related
Agreements in form and substance satisfactory to Purchaser and its counsel.
3.09 Board Approval. The Board of Directors of Seller and CARCO shall
have approved, in accordance with the Certificate of Incorporation and bylaws of
Seller and all applicable statutory requirements: (i) the terms of this
Agreement; (ii) the execution and delivery of this Agreement by duly authorized
officers of Seller; (iii) the performance by Seller of all of the obligations of
Seller under this Agreement. Copies of documents evidencing such approval shall
be certified by the Secretary of Seller and the Secretary of CARCO and delivered
to Purchaser on the Closing Date.
3.10 Governmental Approval. All governmental and other consents and
approvals necessary to consummation of the transactions contemplated by this
Agreement shall have been received in written evidence of such approval shall be
delivered to Purchaser on the Closing Date.
3.11 Financing. Purchaser shall have obtained all of the financing
necessary to fulfill the obligations undertaken by Purchaser in this Agreement
upon terms and conditions acceptable to Purchaser.
10
<PAGE> 11
3.12 Proceedings. All actions to be taken by Seller in connection with
the consummation of the transactions contemplated by this Agreement and all
certificates, opinions and closing documents required to complete the
transactions described herein shall be satisfactory in form and substance to
Purchaser and its counsel.
IV. CONDITIONS TO OBLIGATIONS OF SELLER
Each and every obligation of Seller under this Agreement is, unless
waived in writing by Seller, subject to satisfaction on or before the Closing
Date of each of the following conditions:
4.01 Representations. The representations and warranties of Purchaser
in this Agreement or in any schedule attached hereto shall be true and correct
on and as of the Closing Date and Purchaser shall have delivered to Seller on
the Closing Date a certificate to such effect.
4.02 Opinion of Counsel. The Seller shall have received the opinion,
dated the Closing Date, of Smith, Maurras, Cohen, Redd & Horan, PLC, Attorneys
at Law, who are legal counsel to Purchaser with regard to the matters set forth
in Schedule 4.2.1.
4.03 Performance. Purchaser shall have substantially performed and
complied with all of the terms and conditions required by this Agreement to be
performed and satisfied by Purchaser at or prior to the Closing Date and
Purchaser shall have delivered to Seller a certificate dated the Closing Date to
such effect.
4.04 Litigation. There shall not be threatened, pending or in effect
any action, suit or proceeding before any court or quasi-judicial or
administrative agency of any federal, state, local or foreign jurisdiction
wherein an unfavorable judgment, order, decree, stipulation, injunction or
charge would: (i) prevent consummation of any of the transactions contemplated
by this Agreement; (ii)
11
<PAGE> 12
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation; or (iii) affect adversely the right of Purchaser to own,
operate or control the Purchased Assets or the Business.
4.05 Related Agreements. Purchaser shall have obtained the Related
Agreements in form and substance satisfactory to Seller and its counsel.
4.06 Proceedings. All actions to be taken by the Purchaser in
connection with the consummation of the transactions contemplated by this
Agreement, and all certificates, opinions and closing documents required to
complete the transactions described herein shall be satisfactory in form and
substance to Seller and its counsel.
V. PRE-CLOSING COVENANTS
During the period beginning on the date of this Agreement and ending on
the Closing Date, Seller covenants and agrees as follows:
5.01 Ordinary Course of Business. Seller shall conduct the Business
only in the ordinary and usual course of business in compliance with all
applicable, state, federal and local laws, ordinances, rules and regulations.
Seller shall refrain from entering into any contract or commitment, except
contracts in the ordinary course of business or contracts approved by Purchaser.
5.02 Business Relationships. Seller shall use its best efforts to: (i)
preserve intact Seller's Business organization; (ii) maintain in full force and
effect the Freight Contracts and contracts with owner operators; (iii) maintain
good relationships with licensors, suppliers, customers and others having
business relationships with Seller; and (iv) use Seller's best efforts to serve
customers in an efficient manner.
12
<PAGE> 13
5.03 Charter and Bylaws. No change will be made in the Certificate of
Incorporation or bylaws of the Seller.
5.04 Human Resources. Seller shall use its best efforts to: (i) keep
available the services of Seller's officers, employees and agents; (ii) maintain
the compensation payable by Seller to any officer, employee or agent being paid
$45,000 per year or more at the levels in effect on the date of this Agreement;
and (iii) refrain from making any bonus, pension, retirement or insurance
arrangement with any employee, except those benefits that may have already been
accrued.
5.05 Insurance. Seller shall maintain in full force and effect all of
the policies of insurance held by Seller that are in effect on the date of this
Agreement.
5.06 Notification. Seller shall confer on a regular and frequent basis
with one or more designated representatives of Purchaser to report material
operational matters and to report the general status of ongoing operations.
Seller shall notify Purchaser of: (i) all claims against insurance policies made
by Seller; (ii) any change in the normal course of Seller's business or in the
operation of its property; (iii) the commencement of any suit, action,
proceeding or investigation affecting Seller or the Purchased Assets; (iv) any
tax audit, assessment or proposed audit or assessment affecting Seller or the
Purchased Assets; and (v) any proposed changes in Seller's safety rating under
Federal Motor Carrier Safety Regulations prescribed by the U.S. Department of
Transportation Federal Highway Administration.
5.07 Tax Returns. Seller shall timely file all reports or returns
required to be filed with federal, state and local authorities and will promptly
pay all federal, state and local taxes and assessments and governmental charges
levied or assessed upon Seller or the Purchased Assets or any
13
<PAGE> 14
part thereof.
5.08 Maintenance. Seller shall maintain in good condition and repair
the facilities subject to the Assumed Leases (when required by a lease or rental
agreement, maintain the same) and the Purchased Assets.
5.09 Exclusive Dealing. During the period from the date of this
Agreement to the Closing Date, Seller shall not take any action to, directly or
indirectly, encourage, initiate or engage in discussions or negotiations with,
or provide any information to, any corporation, partnership, person or other
entity or group other than Purchaser, concerning any purchase of the Purchased
Assets or any of the capital stock of Seller or any merger, sale of substantial
assets or similar transaction involving Seller.
5.10 Review of Seller. Purchaser may, prior to the Closing Date,
through its representatives, review the property, books and records of Seller
and its Business, financial and legal condition as it deems necessary or
advisable to familiarize itself with the Purchased Assets and other matters;
such review shall not, however, affect the representations and warranties made
by Seller hereunder. Seller shall permit Purchaser and its representatives to
have full access to its premises and to all books and records of Seller, and to
cause the officers of Seller to furnish Purchaser with such financial and
operating data and other information with respect to the Business and properties
of Seller, and copies of such documents, as Purchaser shall from time to time
reasonably request. Seller shall deliver or cause to be delivered on the Closing
Date, and at such other times and places as shall be reasonably agreed upon,
such additional instruments as Purchaser may reasonably request for the purpose
of carrying out this Agreement.
14
<PAGE> 15
5.11 Driver Bonus. Within 30 days after Closing, Seller shall pay to
all drivers the driver bonus due as of the Closing Date as set forth in the
driver's handbook according to the formula in Schedule 5.11.1.
VI. POST CLOSING COVENANTS
Beginning on the Closing Date and continuing thereafter, Seller and
CARCO jointly and severally covenant and agree as follows:
6.01 Dissolution of Seller. Within 10 days after the Closing Date
Seller shall: (i) adopt the plan of liquidation in Schedule 6.1.1; (ii) file
Articles of Dissolution with the Arkansas Secretary of State; (iii) discharge or
transfer to CARCO or one of its subsidiaries all Seller's employees by January
1, 2000; (iv) end all business operations except those allowed by ACA Section
4-27-1405; and (v) take all actions necessary to be dissolved under the Arkansas
Business Corporation Act. Seller shall not thereafter adopt or file Articles of
Revocation of Dissolution.
6.02 Non-Competition. For a period of 5 years after the Closing Date,
Seller, CARCO and any subsidiary corporation now or hereafter owned or 50% or
more controlled by CARCO shall not: (i) engage in the business of transporting
commodities of any classification in interstate or intrastate commerce; (ii)
apply for, obtain or hold interstate or intrastate authority to transport
commodities of any classification in intrastate or interstate commerce; or (iii)
enter into any contract with a shipper who is a party to a Freight Contract that
is part of the Purchased Assets to convert dedicated service under the Freight
Contract to shipper operated transport using equipment leased from Carco or one
of its subsidiary corporations. This covenant shall not prohibit CARCO or its
subsidiaries from
15
<PAGE> 16
engaging in the short term and long term tractor and trailer leasing business.
The parties acknowledge that any breach of this covenant will cause irreparable
damage to Purchaser. Accordingly, any breach or threatened breach of this
covenant shall entitle Purchaser to an injunction against such breach or
threatened breach in addition to any other legal remedies available to
Purchaser.
6.03 Confidential Information. Purchaser will acquire from Seller under
this Agreement information concerning the customers of Seller that derives
independent economic value from not being generally known to or readily
ascertainable by other persons. The parties agree that the following information
(the "Confidential Information") is a trade secret under ACA Section 4-75-601
and is therefore entitled to protection under applicable law: transportation
terms, profit margins, volume, price structure, equipment needs and future plans
concerning transportation services to be provided by Seller to shippers who are
either: (i) a party to one of the Freight Contracts; or (ii) a customer of
Seller on the execution date of this Agreement. Seller and CARCO agree that for
a period of 5 years after the Closing Date, Seller, CARCO and any subsidiary
corporation now or hereafter owned, 50% or more by CARCO, will not disclosure
the Confidential Information or use the Confidential Information in its business
operations except as may be required to fulfill Sellers obligations under this
Agreement. The parties acknowledge that any breach of this covenant will cause
irreparable damage to Purchaser. Accordingly, any breach or threatened breach of
this covenant shall entitle Purchaser to an injunction against such breach or
threatened breach in addition to any other legal remedies available to
Purchaser.
6.04 Transition. Seller and CARCO will not take any action that is
designed or intended
16
<PAGE> 17
to have the effect of discouraging any lessor, customer, supplier, employee or
other business associate of Seller from maintaining the same business
relationship with Purchaser after closing as it maintained with Seller prior to
the Closing Date. Seller and CARCO will refer all customer inquiries relating to
the Business to Purchaser from and after the Closing Date. Purchaser shall have
access to all of Seller's mail for a period of 30 days after Closing.
6.05 Further Action. In the event that any further action is necessary
or desirable to carry out the purposes of the Agreement after the Closing Date,
Seller and CARCO will take such further action (including the execution and
delivery of other instruments and documents) as Purchaser may reasonably
request, all at the sole cost and expense of Purchaser, unless Purchaser is
entitled to indemnification therefore under Article X.
6.06 SEC Reports. Seller will provide Purchaser with Seller only
audited financial statements for the calendar years ended December 31, 1997 and
December 31, 1998. Seller will provide Purchaser with other financial
information required to complete reports required by the Securities and Exchange
Commission. Purchaser shall pay all fees due Seller's auditors for preparing the
audited financial statements and other financial information required by
Purchaser.
6.07 Mellon Leasing Corporation Loan. Seller will take all steps
necessary and pay any resulting costs to cure a technical default under loan
agreements between Seller and Mellon Leasing Corporation that are assumed by
Purchaser arising from the sale of tractors pledged to Mellon Leasing
Corporation as collateral.
6.08 Operating Authority. Within 90 days after closing Seller will
surrender all authority granted by the Federal Highway Administration to operate
as a common carrier, contract carrier a
17
<PAGE> 18
broker by motor vehicle in the United States. Seller will take all actions
reasonably requested by Purchaser to transfer all authority held by Seller to
operate as a common carrier by motor vehicle in any Canadian province
6.09 401(k) Plan Amendment. The CARCO Capital Corporation 401-K Plan
meets the requirements of a "qualified plan" under Internal Revenue Code Section
401(a) and has not requested a favorable determination letter from the Internal
Revenue Service as the Plan is covered under the remedial amendment period.
Within 5 days after Closing, Seller shall adopt the amendment to its 401(k) plan
in Schedule 6.9.1 effective November 1, 1999.
VII. REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, Seller represents
and warrants to Purchaser that the statements contained in this Article VII are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date except as set forth in the Disclosure Schedule
accompanying this Agreement (the "Disclosure Schedule"). The Disclosure Schedule
will be arranged in paragraphs corresponding to the numbered paragraphs in this
Article VII.
7.01 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the state of Arkansas.
7.02 Authority to Operate Business. Seller has full corporate power and
authority to own and lease its properties used in connection with the Business,
as such properties are now owned and leased, and to conduct the Business as and
where the Business is now conducted and in the manner the Business in now
conducted.
18
<PAGE> 19
7.03 Authorization. Seller has full power and authority to execute,
deliver and perform this Agreement, and Seller has duly authorized the
execution, delivery and performance of this Agreement. This Agreement has been
duly executed and delivered by Seller, is in full force and effect and
constitutes the legal, valid and binding obligation of Seller enforceable in
accordance with its terms.
7.04 Non-Contravention. The execution, delivery and performance of this
Agreement do not violate, contravene or conflict with or result in a breach of
or constitute a default under any law or regulation, or any writ, judgment,
order or decree of any court or governmental instrumentality or arbitrator or
the Certificate of Incorporation or bylaws of Seller, or any indenture,
contract, agreement or other understanding to which Seller is a party or by
which any of its assets are bound.
7.05 No Consent. No consent of any party and no consent, permit,
license, approval or authorization or, or registration or declaration with, or
action by any governmental body, authority, bureau, commission or agency is
required to be made in connection with the execution, delivery and performance
of this Agreement.
7.06 Title. Seller has good and marketable title to the Purchased
Assets free and clear of all liens, claims, security interests or restrictions
on transfer except the Assumed Liabilities.
7.07 Conveyance. The instruments of conveyance, transfer and assignment
that will be delivered by Seller at closing are legal, valid, binding and
enforceable in accordance with their terms and legally sufficient to vest in and
convey to Purchaser all right, title and interest of Purchaser in and to the
Purchased Assets subject to the Assumed Liabilities. Upon completion of the
Closing, Purchaser will have good and merchantable title in the Purchased Assets
subject to the Assumed
19
<PAGE> 20
Liabilities.
7.08 Condition of Purchased Assets. Each of the Purchased Assets has
been maintained in accordance with normal industry practice and is in good
operating condition and repair subject to ordinary wear and tear. Tire wear is
excluded from this provision, Seller is not making any representation or
warranty pertaining to tire wear for the Purchased Assets.
7.09 Dissenter's Rights. No holder of Seller's issued and outstanding
capital stock has any rights under ACA Section 4-27-1301 through Section
4-27-1331 or is a "Dissenter" as such term is used in such laws.
7.10 Financials. Seller has delivered to Purchaser the following
financial statements (collectively, the "Financial Statements"): (i) audited,
consolidated balance sheets and income statements as of and for the fiscal year
ended December 31, 1998 for CARCO and its subsidiaries, including Seller and
CARCO Rentals, Inc.; (ii) unaudited balance sheets and statements of income as
and for the 6 months ended June 30, 1999, for Seller (the "June Financial
Statements"). The Financial Statements are: (x) in accordance with the books and
records of Carco and its subsidiary corporations including Seller and Carco
Rentals, Inc.; (y) complete and correct in all material respects; and (z) have
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby.
7.11 Closing Balance Sheet. All of the Purchased Assets and Assumed
Liabilities are accurately reflected on the Closing Balance Sheet subject to the
First Post Closing Adjustment and the Second Part Closing Adjustment provided
for in this Agreement. The vacation pay reserve, collision expense reserve, pet
deposit, Texas Star deposit cargo damage reserve and owner operator
20
<PAGE> 21
maintenance reserve will each be sufficient to pay all claims properly
chargeable against these reserves.
7.12 Assumed Rental Agreement. At Closing, Purchaser shall assume the
rights obligations of the Seller as Lessee under the Assumed Rental Agreement
for all periods after the Closing Date. With respect to each of the Assumed
Rental Agreements:
(a) All facilities subject to the Assumed Rental Agreements
are supplied with utilities and other services necessary for the operation of
the Business;
(b) Past or present operation of the property subject to the
Assumed Rental Agreements by Seller do not provide a basis for any charge,
complaint, action, suit, proceeding, hearing, investigation or demand against
Seller, CARCO or other subsidiaries of CARCO (the "Seller and its Affiliates")
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, the Resource Conservation and Recovery Act of 1976, the Federal Water
Pollution Control Act of 1972, the Clean Air Act of 1970, the Safe Drinking
Water Act of 1974, the Toxic Substances Control Act of 1976, the Refuse Act of
1899 or the Emergency Planning and Community Right-to-Know Act of 1986 each as
amended, (or any other law or regulation thereunder of any federal, state, local
or foreign government or agency thereof concerning release or threatened release
of hazardous substances, public health and safety, or pollution or protection of
the environment.) No representation or warranty is made concerning operations on
the property subject to the Assumed Rental Agreement prior to Seller's occupancy
of said property.
(c) The Seller and its Affiliates have not handled or disposed
of any substance, arranged for the disposal of any substance or owned or
operated any property or facility subject to
21
<PAGE> 22
the Assumed Rental Agreements in any manner that could form the basis for any
present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim or demand (under the common law or pursuant to any statute)
giving rise to any liability for damage to any site, location or body of water
(surface or subsurface), for illness or personal injury.
(d) There is no basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim or demand
against Seller and its Affiliates that would give rise to any liability under
the Occupational Safety and Health Act, as amended, or any other law, rule or
regulation thereunder of any federal, state, local or foreign government or
agency thereof concerning employee health and safety. No representation or
warranty is made concerning operations or conditions on the property subject to
the Assumed Rental Agreement prior to Seller's occupancy of said property.
(e) Seller has obtained and has been in compliance with all of
the terms and conditions of all permits, licenses and other authorizations which
are required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
time tables which are contained in, all federal, state, local and foreign laws
(including rules, regulations, codes, plans, judgments, orders, decrees,
stipulations, injunctions and charges thereunder) relating to public health and
safety, work or health and safety, and pollution or protection of the
environment, including laws relating to omissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or waste into ambient air, surface water, ground
water, or land or otherwise relating to the manufacturer, processing,
distribution, use, treatment, storage, disposal, transport, or hauling of
22
<PAGE> 23
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or waste.
(f) During Seller's occupancy of the facilities subject to the
Assumed Rental Agreement, Seller has not installed on such rental facilities
asbestos, PCB's, methylene chloride, trichloroethylene,
1,2-trans-dichloroethylene, dioxins, dibenzofurans, and extremely hazardous
substances.
(g) All rent payable by Lessee for use of the premises subject
to the Assumed Rental Agreement will be paid by Seller through the Closing Date.
7.13 Freight Contracts. At Closing, Seller shall transfer, assign and
convey to Purchaser the Freight Contracts. With respect to each of the Freight
Contracts:
(a) The Freight Contract is in full force and effect and is
enforceable in accordance with its terms;
(b) If listed in Schedule 2.1.5, Section I or II, the customer
has consented to the transfer of the Freight Contract to Purchaser and continued
performance of the Freight Contract by Purchaser;
(c) The Freight Contract will be legally binding, enforceable
and in full force and effect on identical terms immediately following the
Closing;
(d) No party to the Freight Contract is in breach and no event
has occurred which, with notice or lapse of time, would constitute a breach or
default or permit termination, modification or acceleration thereunder;
(e) No party to the Freight Contract has repudiated any
provision of the contract;
(f) There are no disputes, oral agreements or forbearance
programs in effect as to
23
<PAGE> 24
the Freight Contract; and
(g) Seller has not assigned, transferred, conveyed, mortgaged
or encumbered any interest in the Freight Contract.
7.14 Inventory. The inventory shown on the Closing Balance Sheet
consists of supplies, purchased parts, fuel and other items used in the
Business, all of which is merchantable and fit for the purpose for which it was
procured, and none of which is damaged or defective. Parts that cannot be used
on the Transportation Equipment in Schedule 2.1.1 have a zero value.
7.15 Litigation. There are no actions, suits or other legal proceedings
or investigations pending, or to the Seller's knowledge, threatened against
Seller in or relating to the Purchased Assets. Neither the Seller or the
Purchased Assets are subject to any order, judgment, decree, stipulation or
award.
7.16 Permits. Seller holds all licenses, permits, franchises and
authorizations necessary for the lawful operation of the Business.
(a) Seller holds the Certificates of Authority to operate as a
motor carrier of general commodities from the Surface Transportation Board as
set forth in Schedule 2.1.7.
(b) Sellers holds the Certificates of Authority to operate
intrastate as a motor carrier of general commodities in certain states as set
forth in Schedule 2.1.7.
(c) Seller has no knowledge that any Certificate of Authority
issued to it to operate as a motor carrier is subject to pending or threatened
action on the part of any administrative agency for revocation or encumbering.
7.17 Absence of Changes. Since June 30, 1999, there has not been: (i) a
material adverse
24
<PAGE> 25
change in the Business, financial condition or operations of Seller; (ii) any
damage, destruction or other casualty loss (whether or not covered by
insurance), materially and adversely affecting the Business, financial condition
or operation of the Seller; or (iii) any other event or condition of any
character (other than events or conditions affecting generally the motor carrier
industry) materially and adversely affecting individually or in the aggregate
the Business, financial condition or operations of Seller.
7.18 Compliance with Law. To the best of Seller's information,
knowledge and belief, the Business is being conducted in compliance and in all
material respects with all applicable domestic and foreign laws, rules,
regulations, judgments and court administrative orders, permits and approvals,
including, without limitation, all federal, state and local energy, public
utility, health, OSHA, and environmental requirements and all other federal,
state, and local governmental and regulatory requirements. Seller is not aware
of any claim or violation or actual violation of any such laws, rules,
regulations, judgments, orders, permits and approvals by Seller. Seller holds or
has applied for all permits, approvals, licenses, certificates and other
authorities required to conduct the Business which will be transferred to
Purchaser as part of the Purchased Assets.
7.19 Taxes. Seller has filed or caused to be filed within the time and
within the manner prescribed by laws, all federal, state, local and foreign tax
returns and reports which are required to be filed by, or with respect to the
Business. To the best of Seller's information, knowledge and belief such returns
and reports reflect accurately all liabilities or taxes owed by Seller for the
period covered thereby. To the best of Seller's information, knowledge and
belief, all state, federal, local and foreign income profits, franchise sales,
use, occupancy, excise, fuel, highway use, personal property, real
25
<PAGE> 26
property, withholding and other taxes and assessments (including interest and
penalties) payable by, or due from Seller have been fully paid or adequately
disclosed and fully provided for in the books of Seller. No examination of any
tax return of Seller is currently in progress. There are no outstanding
agreements or waivers extending the statutory period of limitation applicable to
any tax return of Seller. There is no dispute or claim concerning any tax
liability of Seller that has been waived by a taxing authority in writing or by
notice to Seller by personal contact with Seller's employees who are responsible
for tax matters.
7.20 Intellectual Property.
(a) Seller owns or has the right to use pursuant to license,
sublicense, agreement or permission all intellectual property (including the
intellectual property described in Schedule 2.1.6) necessary for the operation
of the Business as presently conducted. Each item of intellectual property owned
or used by Seller immediately prior to the Closing will be owned or available
for use by Purchaser on identical terms and conditions immediately subsequent to
the Closing. Seller has taken all necessary or desirable actions to protect each
item of intellectual property that it owns or uses.
(b) To the best of Seller's information, knowledge and belief,
Seller has not interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any intellectual property rights of third parties and
Seller's directors and officers have not received any charge, complaint, claim
or notice alleging any such interference, infringement, misappropriation or
violation. To the knowledge of Seller, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
intellectual property rights of Seller.
7.21 Employment Obligations. Seller is not a party to or obligated
under any employment
26
<PAGE> 27
agreement with any of its employees other than agreements that are terminable at
will. To the knowledge of Seller, no key employee or group of employees has any
plans to terminate employment with Seller. Seller and its Affiliates are not a
party to or bound by any collective bargaining agreement, nor has any of them
experienced any strikes, grievances, claims of unfair labor practices, or other
collective bargaining disputes. Seller and its Affiliates have not committed any
unfair labor practice. Seller and its Affiliates have no knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Seller or its Affiliates.
7.22 Notes Receivable. At Closing, Seller will convey to Purchaser the
Notes Receivable. With respect to each Note Receivable:
(a) The Note Receivable is properly reflected on the Closing
Balance Sheet as adjusted by the First Post Closing Adjustment;
(b) The Note Receivable is a valid and enforceable obligation
subject to no setoffs or counter claims;
(c) The Note Receivable is current as of October 31, 1999 and
collectable; and;
(d) All payments due on the Note Receivable after Closing will
be paid to Purchaser in accordance with the terms of the Note Receivable in the
amount stated in the Note Receivable.
7.23 Broker. Seller will pay all commissions, brokerage fees or finders
fees due Vine Street Partners in connection with the transactions contemplated
by this Agreement. No other broker, person or firm acting on behalf of Seller is
or will be entitled to any commission or brokerage fee or finders fee from any
of the parties hereto in connection with any of the transactions contemplated by
27
<PAGE> 28
this Agreement.
7.24 Disclosure. None of this Agreement, the Disclosure Statement, the
Financial Statements, any schedule, exhibit or certificate delivered in
accordance with the terms hereof or any document or statement in writing which
has been supplied by or on behalf of Seller or by any of the Seller's directors
or officers, in connection with the transactions contemplated hereby, contains
any untrue statement of a material fact, or omits any statement of a material
fact necessary in order to make the statements contained therein not misleading.
There is no fact known to Seller, its officers or directors which materially and
adversely affects the Business, prospects or conditions of the Seller or the
Purchased Assets which has not been set forth in this Agreement or in the
schedules, exhibits, certificates, documents or statements in writing furnished
in connection with the transactions contemplated by this Agreement.
VIII. REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated by this Agreement, Purchaser represents
and warrants to Seller that the statements contained in this Article VIII are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date.
8.01 Organization. Purchaser is a corporation duly organized, validly
existing and good standing under the laws of the state of Delaware and is
qualified to do business as a foreign corporation in the state of Arkansas.
8.02 Authorization of Agreement. Purchaser has full power and authority
to execute, deliver and perform this Agreement, and Purchaser has duly
authorized the execution, delivery and
28
<PAGE> 29
performance of this Agreement. This Agreement has been duly executed and
delivered by Purchaser, is in effect, and constitutes the legal, valid and
binding obligation of Purchaser enforceable in accordance with its terms.
8.03 Non Contravention. The execution, delivery and performance of this
Agreement do not violate, contravene or conflict with or result in a breach or
constitute a default under any law or regulation, or any writ, judgment, order
or decree of any court or government instrumentality or arbitrator or the
certificate of incorporation or bylaws of Purchaser, or any indenture, contract,
agreement or other understanding to which Purchaser is a party or by which any
of its assets is bound.
8.04 Broker's Fee. No broker, person or firm acting on behalf of
Purchaser is or will be entitled to any commission or brokers or finders fees
from any of the parties hereto in connection with any of the transactions
contemplated by this Agreement.
8.05 Employees. Purchaser will offer to employ a sufficient number of
Sellers employees so that fewer than fifty (50) of Seller's employees will not
be offered employment by Purchaser.
8.06 Equipment Leasing. For a period of 24 months after the Closing
Date, Purchaser shall not solicit from, or enter into, any Dedicated Contract
Carriage Agreement with any Shipper listed in Schedule 8.6.1 to perform
dedicated carriage services at the location stated in Schedule 8.6.1. The
purpose for this restriction is to restrict Purchaser from converting leasing
and rental customers of CARCO Rentals, Inc. a subsidiary corporation of CARCO to
dedicated services under or contract carriage agreement. The parties acknowledge
that any breach or threatened breach of this covenant will cause irreparable
damage to Seller and CARCO. Accordingly, any breach or threatened breach of this
covenant shall entitle Seller or CARCO to an injunction against such breach or
threatened
29
<PAGE> 30
breach in addition to any other legal remedies available to Seller and CARCO.
Provided, however, this covenant is personal to Seller and CARCO and if CARCO
and its subsidiaries sell substantially all of their tractor and trailer leasing
assets and are not actively engaged in the short term and long term tractor and
trailer leasing business then this restriction against Purchaser in this Section
8.06 shall end upon the sale of such assets and the termination of such
business.
IX. TERMINATION BEFORE CLOSING
9.01 Permitted Termination. Before the Closing Date, this Agreement may
be terminated only: (i) by mutual agreement of the parties; (ii) by Purchaser,
if the conditions to obligations of Purchaser in Article III are not satisfied
or waived by Purchaser on or before the Closing Date; or (iii) by Seller, if the
conditions to obligations of Seller in Article IV are not satisfied or waived by
Seller on or before the Closing Date.
9.02 No Damage for Permitted Termination. If this Agreement is
terminated as provided in Section 9.01, then this Agreement shall be null, void
and of no effect and no party shall be liable to any other party for any loss,
damage or expense arising from this Agreement and the indemnification provisions
in Article X shall not apply.
X. INDEMNIFICATION
10.01 Indemnification of Purchaser. Subject to the limit on
indemnification of Purchaser in Section 10.02, Seller shall indemnify Purchaser,
its successors and assigns against any loss, damage and expense, including
reasonable attorneys fees and out-of-pocket expenses suffered by Purchasers, its
successor and assigns (Purchaser's Indemnified Losses) arising out of:
30
<PAGE> 31
(a) Any breach by Seller or CARCO, or either one of them, of
this Agreement;
(b) Any inaccuracy or breach of any covenant (including
Preclosing Covenants and Post Closing Covenants), representation or warranty of
Seller or CARCO made in this Agreement;
(c) Any Assumed Liabilities that exceed the amount shown on
the Closing Balance Sheet;
(d) Any overpayment of the Purchase Price as reflected in the
First Post Closing Adjustment or the Second Post Closing Adjustment.
10.02 Limit on Indemnification of Purchaser. Purchaser shall be
entitled to recover from Seller Purchasers Indemnified Losses for damages
(excluding ordinary wear and tear) to power units and trailers that are part of
the Purchased Assets only to the extent such damage exceeds $500 for any
individual power unit or trailer. Purchaser shall be fully indemnified for all
collision damage in excess of $500 for any individual power unit or trailer.
Tire wear on the Purchased Assets will not be considered as a loss or damage to
Purchaser and Purchaser will not be entitled to indemnification from Seller for
tire wear issues or deficiencies. Both, Purchaser and Seller shall approve of
all cargo claims in excess of $500 before the claim will be allowed.
10.03 Indemnification of Seller. Purchaser agrees to indemnify Seller,
its successors and assigns against any loss, damage or expense, including
reasonable attorneys fees and other out-of-pocket expense suffered by Seller,
its successors and assigns, ("Sellers Indemnified Losses") arising from:
(a) Any breach by Purchaser of this Agreement;
(b) Any inaccuracy or breach by Purchaser of any covenant,
representation or
31
<PAGE> 32
warranty of Purchaser made in this Agreement;
(c) Any underpayment of the Purchase Price as reflected in the
First Post Closing Adjustment or the Second Post Closing Adjustment.
10.04 Purchaser's Indemnification Procedure. All claims by Purchaser
for indemnification hereunder shall be presented and paid as follows:
(a) Purchaser shall promptly notify Seller of any claim that
is given or could give rise to a right of indemnification under this Agreement
(the "Notice of Claim"). The Notice of Claim shall include the amount of the
claim and a description of the facts giving rise to the claim unless otherwise
provided herein. Notice of Claim must be received by Seller on or before the
Warranty Termination Date or Seller will have no indemnification obligation with
respect to the claim.
(b) Seller shall have 30 days after the date of the Notice of
Claim to send written notice to Purchaser if it determined that the claim or any
part thereof is not subject to indemnification under this Article (the "Notice
of Objection"). If a Notice of Objection is not sent by the Seller, the claim
and all related expenses shall be paid by Seller. If the Seller timely sends a
Notice of Objection and the parties are unable to solve their differences, then
the issue shall be resolved by arbitration in the city of Fort Smith, Arkansas,
or such other location acceptable to all parties, in accordance with the rules
of the American Arbitration Association. The controversy or claim shall be
submitted to three neutral arbitrators chosen from the national panel of
arbitrators. The Purchaser and Seller shall each choose one arbitrator and the
two arbitrators shall choose a third arbitrator. The decision of the arbitrators
shall be final and binding upon all parties, and judgment upon the award
rendered by the arbitrators may be entered by any court having proper
jurisdiction. If no Notice of Objection is
32
<PAGE> 33
received by Purchaser, Purchaser shall be entitled to payment from Seller
immediately upon final determination of any claim for which indemnification is
due, whether by settlement, judgment, arbitrators decisions or other resolution
of the claim.
(c) Purchaser shall have administrative control of all claims
by third parties that are subject to indemnification under this Article and
shall be responsible for hiring legal counsel, accountants or other advisors
deemed necessary to defend or settle the claims. However, no claim will be
settled without the Seller's approval. Seller may employ legal counsel,
accountants or other advisors to assist in the defense or resolution of the
claim, but the cost of said advisors shall be paid by Seller. Seller will also
render any assistance reasonably requested by Purchaser to defend the claim,
including, but not limited to, testimony at depositions, hearings and trials, as
well as providing information and assistance during the defense of the claim.
10.05 Purchaser's Right of Set Off. Purchaser shall have a right of set
off against amounts owed by Purchaser to Carl D. Corley under the Noncompetition
Agreement in Schedule 2.8.1 for all Purchaser's Indemnified Losses. Purchaser
must comply with the Purchaser's Indemnification Procedure in Section 10.04 and
the requirements of the Non-Competition Agreement in Schedule 2.8.1.
10.06 Seller's Indemnification Procedure. All claims by Seller for
indemnification hereunder shall be presented and paid as follows:
(a) Seller shall promptly notify Purchaser of any claim that
is given or could give rise to a right of indemnification under this Agreement
(the "Notice of Claim"). The Notice of Claim shall include the amount of the
claim and a description of the facts giving rise to the claim unless otherwise
33
<PAGE> 34
provided herein. Notice of Claim must be received by Purchaser on or before the
Warranty Termination Date or Purchaser will have no indemnification obligation
with respect to the claim.
(b) Purchaser shall have 30 days after the date of the Notice
of Claim to send written notice to Seller if it is determined that the claim or
any part thereof is not subject to indemnification under this Article (the
"Notice of Objection"). If a Notice of Objection is not sent by the Purchaser,
the claim and all related expenses shall be paid by Purchaser. If the Purchaser
timely sends a Notice of Objection and the parties are unable to solve their
differences, then the issue shall be resolved by arbitration in the city of Fort
Smith, Arkansas, or such other location acceptable to all parties, in accordance
with the rules of the American Arbitration Association. The controversy or claim
shall be submitted to three neutral arbitrators chosen from the national panel
of arbitrators. The Purchaser and Seller shall each choose one arbitrator and
the two arbitrators shall choose a third arbitrator. The decision of the
arbitrators shall be final and binding upon all parties, and judgment upon the
award rendered by the arbitrators may be entered by any court having proper
jurisdiction. If no Notice of Objection is received by Seller, Seller shall be
entitled to payment from Purchaser immediately upon final determination of any
claim for which indemnification is due, whether by settlement, judgment,
arbitrators decision or other resolution of the claim.
(c) Purchaser shall have administrative control of all claims
by third parties that are subject to indemnification under this Article and
shall be responsible for hiring legal counsel, accountants or other advisors
deemed necessary to defend or settle the claims. However, no claim will be
settled without the Seller's approval. Seller may employ legal counsel,
accountants or other advisors to assist in the defense or resolution of the
claim, but the cost of said advisors shall be paid
34
<PAGE> 35
by Seller. Seller will also render any assistance reasonably requested by
Purchaser to defend the claim, including, but not limited to, testimony at
depositions, hearings and trials, as well as providing information and
assistance during the defense of the claim.
10.07 Warranty Termination Date. Seller shall have no obligation to
indemnify Purchaser under Section 10.01 and Purchaser shall have no obligation
to indemnify Seller under Section 10.03 after the following dates (individually,
the "Warranty Termination Date"):
(a) Purchasers claims for indemnification for damages to power
units and trailers in excess of the Collision Reserve on the Closing Balance
Sheet (after all Post Closing Adjustments) and the limit in Section 10.02 must
be made by Purchaser and received by Seller within 60 days after the Closing
Date.
(b) Purchasers claims for indemnification arising from cargo
claims in excess of the Cargo Reserve on the Closing Balance Sheet (after all
Post Closing Adjustments) must be made by Purchaser and received by Seller
within 9 months after the Closing Date.
(c) Purchasers claims for indemnification arising from
vacation pay expenses in excess of the accrued Vacation Reserve on the Closing
Balance Sheet (after all Post Closing Adjustments) must be made within 12 months
after the Closing Date.
(d) Purchasers claims for indemnification arising from
violation of the covenant against competition in Section 6.02 and disclosure of
confidential information in Section 6.03 must be made by Purchaser and received
by Seller within sixty-one (61) months after the Closing Date.
(e) Claims for indemnification by either Purchaser or Seller
arising from all sources, except those described in paragraphs a, b, c and d of
this Section 10.07 shall be made by the party
35
<PAGE> 36
seeking indemnification and received by the indemnifying party on or before the
third anniversary of the Closing Date.
XI. MISCELLANEOUS PROVISIONS
11.01 Press and Public Relations. No public disclosure of the
transactions described in this Agreement shall be made by Seller, its officers,
directors, shareholders or employees. All inquiries by third parties shall be
referred to Jerry D. Orler, Chief Financial Officer of Purchaser. All public
statements, press releases, etc. will be coordinated by Mr. Orler and issued by
Purchaser. Purchaser will issue an appropriate press release should
circumstances require public disclosure.
11.02 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
11.03 Expenses. Purchaser shall pay all of its expenses incurred in
connection with the negotiation and consummation of this Agreement and the
transactions contemplated hereunder. Seller shall pay all of its expenses
incurred in connection with the negotiation and consummation of this Agreement
and the transactions contemplated hereunder.
11.04 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed to be an original, but all of which
shall be considered one and the same instrument.
11.05 Waiver. At any time any party may: (i) waive any inaccuracies in
the representations and warranties of any other party contained in this
Agreement, or any document delivered pursuant hereto, or (ii) waive compliance
by any party with any of the covenants and agreements contained in this
Agreement to the extent permitted by law, or (iii) extend the time for
performance of any of the
36
<PAGE> 37
obligations of the parties hereto; provided, however, no failure or delay in
exercising any right or remedy pursuant to this Agreement shall constitute a
waiver of any other right or remedy pursuant hereto. Resort to one form of
remedy shall not constitute a waiver of alternate remedies except as otherwise
provided herein. A waiver of any portion of this Agreement must be in writing
and no portion of this Agreement may be modified or amended orally, but such
modification or amendment shall be effective if it is in writing and signed by
all parties of this Agreement.
11.06 Non-assignability. Neither this Agreement nor any part hereof
shall be assigned by Purchaser or Seller without the prior written consent of
the other party.
11.07 Notice. All notices and other communications shall be in writing
and shall be deemed to have been duly given if delivered personally, or if
mailed in the United State by certified or registered mail, postage prepaid,
return receipt requested to the parties at the following addresses, or at such
other addresses as may be given in writing by one party to the other at least
five days prior to the mailing of such notice:
If to Seller, to: CARCO Carrier Corporation
ATT: Carl D. Corley
P. O. Box 10210
Fort Smith, AR 72917
With an information
copy to: J. Gregory Magness, Esq.
Hardin, Jesson & Terry
P. O. Box 10127
Fort Smith, AR 72917
37
<PAGE> 38
If to CARCO, to: CARCO Capital Corporation
ATT: Carl D. Corley
P. O. Box 10210
Fort Smith, AR 72917
If to Purchaser, to: USA Truck, Inc.
ATT: Robert M. Powell
3200 Industrial Park Road
Van Buren, AR 72956
With an information
copy, to: Robert Y. Cohen, II, Esq.
Smith, Maurras, Cohen, Redd & Horan, PLC
P. O. Box 10205
Fort Smith, AR 72917
11.08 Entire Agreement. This Agreement contains the entire
understanding between the parties and supersedes all prior agreements,
arrangements and understandings related to the subject matter hereof. There are
no written or oral agreements, understandings, representations or warranties
between the parties other than those set forth or referred to in this Agreement.
No amendment or modification of this Agreement shall be binding on the parties
or effective in any way unless such amendment or modification is in writing and
executed by the parties hereto.
11.09 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the state of Arkansas.
11.10 Survival of Representations and Warranties. Unless otherwise
provided herein, the covenants, agreements, representations and warranties of
the parties contained in this Agreement or in any schedule, exhibit, certificate
or other writing delivered pursuant to or in connection with this Agreement
shall survive closing and shall continue until the Warranty Termination Date.
After the Warranty Termination Date, no party to this Agreement shall be liable
to any other party for breach
38
<PAGE> 39
of warranty or representation unless such violation occurs before the Warranty
Termination Date and written notice of claim is sent as provided herein before
the Warranty Termination Date.
11.11 Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement shall be
deemed valid and in force to the fullest extent possible.
11.12 Construction. The captions of this Agreement are for convenience
only and shall not be construed or referred to in resolving questions of
construction. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rule of
strict construction shall be applied against any party.
11.13 Incorporation of Exhibits and Schedules. The exhibits and
schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
11.14 Specific Performance. Each of the parties acknowledge and agree
that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the parties agree that the
other party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
party, and addition to any other remedy to which it may be entitled at law or in
equity.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
31st day of October, 1999.
39
<PAGE> 40
SELLER:
CARCO CARRIER CORPORATION
By /s/ CARL D. CORLEY
-------------------------------------
President
ATTEST:
/s/ CARL D. CORLEY, JR.
- ------------------------
Secretary
CARCO CAPITAL CORPORATION
By /s/ CARL D. CORLEY
-------------------------------------
President
ATTEST:
/s/ CARL D. CORLEY, JR.
- ------------------------
Secretary
PURCHASER:
USA TRUCK, INC.
By /s/ J.B. SPEED
-------------------------------------
Chairman
ATTEST:
/s/ JERRY D. ORLER
- -------------------------
Secretary
40
