AGREEMENT AND PLAN OF MERGER
AMONG
ADVANTAGE MANAGEMENT HOLDINGS CORP.,
KTC/AMG HOLDINGS CORP.,
KENAN TRANSPORT COMPANY
AND
KTC ACQUISITION CORP.
January 25, 2001
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
Section 1.1 The Merger.................................................1
Section 1.2 Articles of Incorporation..................................2
Section 1.3 Bylaws.....................................................2
Section 1.4 Directors and Officers.....................................2
ARTICLE II
Conversion of Securities
Section 2.1 Conversion of Securities...................................2
Section 2.2 Surrender of Certificates..................................3
Section 2.3 No Further Ownership Rights in Company Common Stock........4
Section 2.4 Lost, Stolen or Destroyed Certificates.....................4
Section 2.5 Withholding Rights.........................................4
Section 2.6 Adjustments................................................4
ARTICLE III
Representations and Warranties of Company
Section 3.1 Organization and Power.....................................5
Section 3.2 Corporate Authorization....................................5
Section 3.3 Governmental Authorization.................................6
Section 3.4 Non-Contravention..........................................6
Section 3.5 Capitalization of Company..................................7
Section 3.6 Capitalization of Subsidiaries.............................8
Section 3.7 SEC Filings................................................8
Section 3.8 Financial Statements.......................................8
Section 3.9 Disclosure Documents.......................................9
Section 3.10 Absence of Certain Changes.................................9
Section 3.11 No Undisclosed Material Liabilities.......................10
Section 3.12 Litigation................................................11
Section 3.13 Taxes.....................................................11
Section 3.14 Employee Benefit Plans; ERISA.............................12
Section 3.15 Compliance with Laws......................................14
Section 3.16 Licenses and Permits......................................14
Section 3.17 No Default................................................14
Section 3.18 Finders' Fees.............................................15
Section 3.19 Environmental Matters.....................................15
Section 3.20 Title to and Condition of Assets..........................16
Section 3.21 Material Contracts........................................16
Section 3.22 Absence of Certain Business Practices.....................16
Section 3.23 Opinion of Financial Advisor..............................16
Section 3.24 Takeover Statutes.........................................17
ARTICLE IV
Representations and Warranties of ADVANTAGE AND Parent
Section 4.1 Organization and Power....................................17
Section 4.2 Corporate Authorization...................................17
Section 4.3 Governmental Authorization................................17
Section 4.4 Non-Contravention.........................................17
Section 4.5 Litigation................................................18
Section 4.6 Information Supplied......................................18
Section 4.7 Financing.................................................18
ARTICLE V
Covenants
Section 5.1 Conduct of Company........................................18
Section 5.2 Shareholder Meeting, Proxy Materials......................21
Section 5.3 Access to Information.....................................22
Section 5.4 No Solicitation...........................................22
Section 5.5 Notice of Certain Events..................................23
Section 5.6 Reasonable Best Efforts...................................24
Section 5.7 Cooperation...............................................26
Section 5.8 Public Announcements......................................26
Section 5.9 Further Assurances........................................26
Section 5.10 Director and Officer Liability............................26
Section 5.11 Obligations of Merger Subsidiary..........................28
Section 5.12 Antitakeover Statutes.....................................28
Section 5.13 Employee Benefits.........................................28
Section 5.14 Integration Team..........................................28
ARTICLE VI
Conditions to the Merger
Section 6.1 Conditions to the Obligations of Each Party...............29
Section 6.2 Conditions to the Obligations of Parent and Merger
Subsidiary................................................29
Section 6.3 Conditions to the Obligations of Company..................29
ARTICLE VII
Termination
Section 7.1 Termination...............................................30
Section 7.2 Effect of Termination.....................................31
Section 7.3 Payments..................................................31
ARTICLE VIII
Miscellaneous
Section 8.1 Notices...................................................33
Section 8.2 Entire Agreement; Non-Survival of Representations and
Warranties; Third Party Beneficiaries.....................34
Section 8.3 Amendments; No Waivers....................................34
Section 8.4 Successors and Assigns....................................34
Section 8.5 Governing Law.............................................34
Section 8.6 Jurisdiction..............................................34
Section 8.7 Waiver Of Jury Trial......................................34
Section 8.8 Counterparts; Effectiveness...............................35
Section 8.9 Interpretation............................................35
Section 8.10 Severability..............................................35
Section 8.11 Specific Performance......................................35
Section 8.12 Joint and Several Liability...............................36
EXHIBITS
Exhibit A.........Voting Agreement
Exhibit B.........Plan of Merger
DEFINED TERMS
"1933 Act" has the meaning given to it in Section 3.7(c).
"1934 Act" has the meaning given to it in Section 3.3.
"Acquisition Proposal" has the meaning given to it in Section 5.4.
"Advantage" has the meaning given to it in the introduction to the
Agreement.
"Advantage Confidentiality Agreement" has the meaning given to it in
Section 5.3.
"Agreement" has the meaning given to it in the introduction to the
Agreement.
"Antitrust Law" has the meaning given to it in Section 5.6(b).
"Certificates" has the meaning given to it in Section 2.2(c).
"Closing" has the meaning given to it in Section 1.1(b).
"Closing Date" has the meaning given to it in Section 1.1(b).
"Code" has the meaning given to it in Section 2.5.
"Company 10-Q" has the meaning given to it in Section 3.8.
"Company" has the meaning given to it in the introduction to the
Agreement.
"Company Agreement" has the meaning given to it in Section 3.4.
"Company Balance Sheet Date" has the meaning given to it in Section
3.8.
"Company Benefit Plans" has the meaning given to it in Section 3.14(a).
"Company Board" has the meaning given to it in Section 3.2(b).
"Company Common Stock" has the meaning given to it in the Background
Statement to this Agreement.
"Company Disclosure Schedule" has the meaning given to it in Section
3.1.
"Company Financial Advisor" has the meaning given to it in Section
3.18.
"Company Incentive Plan" has the meaning given to it in Section 2.1(d).
"Company Proxy Statement" has the meaning given to it in Section 3.9.
"Company Requisite Vote" has the meaning given to it in Section 3.2(a).
"Company SEC Documents" has the meaning given to it in Section 3.7(a).
"Company Securities" has the meaning given to it in Section 3.5(a).
"Company Shareholder Approval" has the meaning given to it in Section
5.2(a).
"Company Shareholder Meeting" has the meaning given to it in Section
5.2(a).
"Company Subsidiary Securities" has the meaning given to it in Section
3.6.
"DOJ" has the meaning given to it in Section 5.6(c).
"Effective Time" has the meaning given to it in Section 1.1(c).
"End Date" has the meaning given to it in Section 7.1(b)(i).
"Environmental Laws" has the meaning given to it in Section 3.19(b)(i).
"Environmental Liabilities" has the meaning given to it in Section
3.19(b)(ii).
"ERISA" has the meaning given to it in Section 3.14(a).
"ERISA Affiliate" has the meaning given to it in Section 3.14(a).
"Expenses" has the meaning given to it in Section 7.3(b).
"Financing Letters" has the meaning given to it in Section 4.7.
"FTC" has the meaning given to it in Section 5.6(c).
"GAAP" has the meaning given to it in Section 3.8.
"Governmental Authority" has the meaning given to it in Section 3.3.
"HSR Act" has the meaning given to it in Section 3.3.
"Hazardous Substances" has the meaning given to it in Section
3.19(b)(iii).
"Indemnified Party" has the meaning given to it in Section 5.10(a).
"Indemnified Parties" has the meaning given to it in Section 5.10(a).
"know" or "knowledge" means, with respect to any party, the actual
knowledge of such party's executive officers after commercially reasonable
investigation and inquiry, except that no such inquiry of third parties who are
not employees of the applicable party or its Subsidiaries shall be required
under Section 3.17 or Section 5.5.
"Lien" has the meaning given to it in Section 3.4.
"Material Adverse Effect" has the meaning given to it in Section 3.1.
"Material Company Agreement" has the meaning given to it in Section
3.21.
"Merger" has the meaning given to it in Section 1.1(a).
"Merger Consideration" has the meaning given to it in Section 2.1(a).
"Merger Subsidiary" has the meaning given to it in the introduction to
the Agreement.
"NCBCA" has the meaning given to it in Section 1.1(a).
"Options" has the meaning given to it in Section 2.1(d).
"Parent" has the meaning given to it in the introduction to the
Agreement.
"Payment Agent" has the meaning given to it in Section 2.2(a).
"Payment Funds" has the meaning given to it in Section 2.2(b).
"Permits" has the meaning given to it in Section 3.16.
"Permitted Liens" has the meaning given to it in Section 3.4.
"person" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in the 1934 Act).
"Plan of Merger" has the meaning given to it in Section 3.2(b).
"Proceeding" has the meaning given to it in Section 3.12.
"SEC" has the meaning given to it in Section 3.7(a).
"Service" has the meaning given to it in Section 3.13(c).
"Subsidiary" means when used with reference to any entity, any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other subsidiary of such party is a general or
managing partner or (ii) the outstanding voting securities or interests of
which, having by their terms ordinary voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization, is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries.
"Superior Proposal" has the meaning given to it in Section 5.4.
"Surviving Corporation" has the meaning given to it in Section 1.1(a).
"Takeover Statute" has the meaning given to it in Section 3.24.
"Tax Return" has the meaning given to it in Section 3.13.
"Taxes" has the meaning given to it in Section 3.13.
"Taxing Authority" has the meaning given to it in Section 3.13.
"Termination Fee" has the meaning given to it in Section 7.3(b).
"Voting Agreement" has the meaning given to it in the Background
Statement to this Agreement.
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
January 25, 2001, among ADVANTAGE MANAGEMENT HOLDINGS CORP., a Delaware
corporation ("Advantage"), KTC/AMG HOLDINGS CORP., a Delaware corporation
("Parent"), KENAN TRANSPORT COMPANY, a North Carolina corporation ("Company"),
and KTC ACQUISITION CORP., a North Carolina corporation and a wholly-owned
subsidiary of Parent ("Merger Subsidiary").
Background Statement
The respective Boards of Directors of Advantage, Parent and Company
have (i) each determined that it is in the best interest of their respective
companies and shareholders for Parent to acquire Company upon the terms and
subject to the conditions set forth herein and (ii) approved the merger of
Merger Subsidiary with and into Company on the terms and conditions set forth
herein. Pursuant to the Merger, among other things, each issued and outstanding
share of the common stock, no par value, of Company ("Company Common Stock")
issued and outstanding immediately prior to the effective time, other than
shares held directly by Parent and Merger Subsidiary, will be converted into the
right to receive in cash the Merger Consideration. The parties hereto desire to
provide for certain undertakings, conditions, representations, warranties and
covenants in connection with the transactions contemplated hereby.
Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, the ▇▇▇▇▇
▇. ▇▇▇▇▇ 1988 Trust, the 1965 Trust established by ▇▇▇▇▇ ▇▇▇▇▇▇ Kenan for the
benefit of the family of ▇▇▇▇▇ ▇. ▇▇▇▇▇ and certain directors and executive
officers of Company are executing and delivering to Parent an agreement
substantially in the form of Exhibit A hereto (the "Voting Agreement"), pursuant
to which, among other things, each such person is agreeing to vote all of the
shares of Company Common Stock owned, beneficially or of record, by him, her or
it to approve the Merger.
Statement of Agreement
NOW, THEREFORE, in consideration of the premises and the respective
undertakings, conditions, representations, warranties, covenants, and agreements
set forth herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1.......The Merger.
----------
(a) Upon the terms and subject to the conditions set forth in this Agreement, at
the Effective Time, Merger Subsidiary shall be merged (the "Merger") with and
into Company in accordance with the North Carolina Business Corporation Act, as
amended ("NCBCA"), whereupon the separate existence of Merger Subsidiary shall
cease and Company shall continue as the surviving corporation (the "Surviving
Corporation").
(b) Upon the terms and subject to the conditions of this Agreement, the closing
of the Merger (the "Closing") shall take place at 10:00 a.m. on a date (the
"Closing Date") which shall be no later than the second business day after
satisfaction or waiver (subject to applicable law) of the conditions set forth
in Article VI (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of those
conditions) at the offices of Fulbright & ▇▇▇▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other time, date or place as agreed to in
writing by the parties hereto.
(c) Upon the Closing, Company and Merger Subsidiary shall deliver to the North
Carolina Secretary of State for filing articles of merger, with the Plan of
Merger attached thereto, with regard to the Merger in accordance with the NCBCA,
and make all other filings or recordings required by the NCBCA in connection
with the Merger. The Merger shall become effective at the time of filing of the
articles of merger or at such later time as is agreed to by Parent and Company
and specified in the articles of merger (the "Effective Time"). The Merger shall
have the effects set forth in Section 55-11-06 of the NCBCA.
Section 1.2.......Articles of Incorporation. Subject to the last sentence of
Section 5.10(b), the articles of incorporation of Company in effect at the
Effective Time shall be the articles of incorporation of the Surviving
Corporation until amended in accordance with applicable law.
Section 1.3.......Bylaws. Subject to the last sentence of Section 5.10(b), the
bylaws of Merger Subsidiary in effect at the Effective Time shall be the bylaws
of the Surviving Corporation until amended in accordance with applicable law.
Section 1.4.......Directors and Officers. From and after the Effective Time
until their successors are duly elected or appointed and qualified in accordance
with the NCBCA and the articles of incorporation and bylaws of the Surviving
Corporation, (a) the directors of Merger Subsidiary at the Effective Time shall
be the directors of the Surviving Corporation and (b) the officers of Company at
the Effective Time shall be the officers of the Surviving Corporation.
ARTICLE II
Conversion of Securities
Section 2.1.......Conversion of Securities. As of the Effective Time, by virtue
of the Merger and without any action on the part of any holder of any capital
stock of Parent, Merger Subsidiary or Company:
(a) Company Common Stock. Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than any shares of
Company Common Stock held directly by Parent or Merger Subsidiary) automatically
shall be converted into the right to receive, pursuant to the provisions of this
Section 2.1, $35 in cash without interest (the "Merger Consideration").
(b) Cancellation of Certain Shares. Each share of Company Common Stock held
directly by Parent and Merger Subsidiary immediately prior to the Effective Time
shall be cancelled and extinguished, and no consideration shall be delivered
therefor.
(c) Capital Stock of Merger Subsidiary. Each share of common stock, no par
value, of Merger Subsidiary issued and outstanding immediately prior to the
Effective Time shall automatically be converted into one validly issued, fully
paid and nonassessable share of common stock, no par value, of the Surviving
Corporation.
(d) Employee Stock Options. Each holder of an outstanding employee stock option
to purchase shares of Company Common Stock (the "Options") granted under the
Company's 1998 Long-Term Incentive Plan (the "Company Incentive Plan") has
agreed that, at or immediately prior to the Effective Time, each such Option
that has not been exercised prior to such time shall be cancelled, and each such
holder of any such Option shall be paid by Parent or the Surviving Corporation
for each such Option an amount determined by multiplying (x) the excess, if any,
of the Merger Consideration over the applicable per share exercise price of such
Option by (y) the number of shares of Company Common Stock such holder could
have purchased (assuming full vesting of all Options) had such holder exercised
such Option in full immediately prior to the Effective Time. Such payment shall
be made promptly (but not later than ten business days) after the Effective
Time.
Section 2.2.......Surrender of Certificates.
(a) Payment Agent. Parent shall select a bank or trust company reasonably
acceptable to Company to act as the payment agent (the "Payment Agent") in the
Merger.
(b) Parent to Provide Merger Consideration. At the Closing, Parent shall make
available to the Payment Agent for payment in accordance with this Article II a
cash amount equal to the aggregate Merger Consideration payable pursuant to
Section 2.1 in exchange for outstanding shares of Company Common Stock, to be
held by the Payment Agent for the benefit of and distributed to holders of such
shares in accordance with this Agreement. The Payment Agent shall agree to hold
such funds (the "Payment Funds") for delivery as contemplated herein. If for any
reason the Payment Funds are inadequate to pay the Merger Consideration, Parent
shall remain liable and shall promptly make available to the Payment Agent
additional funds for the payment thereof. The Payment Funds shall not be used
for any purpose except as expressly provided in this Agreement. The Payment
Funds shall be invested by the Payment Agent as directed by Parent or the
Surviving Corporation pending payment thereof by the Payment Agent to the
holders of record of shares of Company Common Stock. Earnings from such
investment shall be the sole and exclusive property of Parent and the Surviving
Corporation, and no part of such earnings shall accrue to the benefit of holders
of record of shares of Company Common Stock.
(c) Exchange Procedures. Promptly after the Effective Time, Parent shall cause
the Payment Agent to mail to each holder of record as of the Effective Time of a
certificate or certificates (the "Certificates") that immediately prior to the
Effective Time represented outstanding shares of Company Common Stock which were
converted into the right to receive the Merger Consideration (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title shall pass, only upon delivery of the Certificates to the Payment
Agent and shall be in such form and have such other provisions as Parent shall
reasonably specify) and (ii) instructions for effecting the exchange of the
Certificates for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Payment Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal duly completed and
validly executed in accordance with the instructions thereto and such other
documents as may reasonably be required, the holder of such Certificate shall be
entitled to receive in exchange therefor the Merger Consideration in accordance
with Section 2.1, and the Certificate so surrendered shall forthwith be
cancelled. Until so surrendered, each outstanding Certificate will be deemed
from and after the Effective Time, for all corporate purposes, to evidence only
the right to receive the Merger Consideration attributable to the Company Common
Stock represented by each such Certificate. No interest shall be paid or accrued
on any amount payable upon surrender of any Certificate. If any portion of the
Merger Consideration is to be paid to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition to such
payment that the Certificate so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the person requesting such
payment shall pay to the Payment Agent any transfer or similar other taxes
required as a result of such payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Payment Agent
that such tax has been paid or is not payable.
(d) No Liability. Notwithstanding anything to the contrary in this Section 2.2,
none of the Payment Agent, Parent, Merger Subsidiary, the Surviving Corporation
or any other party hereto shall be liable to any person in respect of any Merger
Consideration for any amount properly delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(e) Termination of Payment Agent. Any Merger Consideration made available to the
Payment Agent pursuant to Section 2.2(b) which remains undistributed for six
months after the Effective Time pursuant to this Section 2.2 shall be returned
by the Payment Agent to the Surviving Corporation, which shall thereafter act as
Payment Agent, and thereafter any holder of unsurrendered Certificates shall
look as a general creditor only to Parent and the Surviving Corporation for
payment of any funds to which such holder may be due, subject to applicable law.
Section 2.3.......No Further Ownership Rights in Company Common Stock. The
Merger Consideration paid in exchange for shares of Company Common Stock in
accordance with the terms hereof shall be deemed to have been paid in full
satisfaction of all rights pertaining to such shares of Company Common Stock,
and there shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. If after the Effective Time
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Article II.
Section 2.4.......Lost, Stolen or Destroyed Certificates. If any Certificates
shall have been lost, stolen or destroyed, the Payment Agent shall deliver in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, the Merger Consideration;
provided, however, that Parent may, in its discretion and as a condition
precedent to such delivery, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Parent, the Surviving
Corporation or the Payment Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
Section 2.5.......Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled, or shall be entitled to cause the Payment Agent, to
deduct and withhold from the Merger Consideration otherwise payable pursuant to
this Agreement to any holder of shares of Company Common Stock such amounts as
it is required to deduct and withhold with respect to the making of such payment
under the Internal Revenue Code of 1986, as amended (the "Code"), and the rules
and regulations promulgated thereunder, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by the Surviving
Corporation, Parent or the Payment Agent, as the case may be, such amounts shall
be treated for all purposes of this Agreement as having been paid to the holder
of the shares of Company Common Stock in respect to which such deduction and
withholding was made by the Surviving Corporation, Parent or the Payment Agent,
as the case may be.
Section 2.6.......Adjustments. If prior to the Effective Time there is any
change in the outstanding shares of Company Common Stock, including by reason of
any reclassification, recapitalization, stock split or combination, exchange or
readjustment of such shares, or stock dividend thereon, the Merger Consideration
shall be appropriately adjusted.
ARTICLE III
Representations and Warranties of Company
Company represents and warrants to Parent that:
Section 3.1.......Organization and Power. Each of Company and its Subsidiaries
is a corporation, partnership or other entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization, and has the requisite corporate or other power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted. Each of Company and its Subsidiaries is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so duly qualified or licensed and in good standing would not, individually or in
the aggregate, have a Material Adverse Effect on Company.
For purposes of this Agreement, a "Material Adverse Effect" with
respect to Company, Advantage or Parent, as the case may be, means a material
adverse effect on (i) the financial condition, business, properties or results
of operations of such person and its Subsidiaries, taken as a whole, or (ii) the
ability of such person to perform its obligations under or to consummate the
transactions contemplated by this Agreement, provided that none of the following
shall constitute a Material Adverse Effect: (a) any event, occurrence or
development relating to or arising out of general economic conditions; (b) any
event, occurrence or development generally affecting the industries in which
Company and its Subsidiaries or Advantage and its Subsidiaries operate; or (c)
any event, occurrence or development in Company's business after the date hereof
attributable solely to actions taken by Parent.
Section 3.1 of the disclosure schedule delivered by Company to Parent
prior to the execution of this Agreement (the "Company Disclosure Schedule")
sets forth a complete list of Company's Subsidiaries and a complete and accurate
list of all jurisdictions in which Company and each of its Subsidiaries is
qualified to do business as a foreign corporation. Company and its Subsidiaries
have no investments (whether through acquisition of an equity investment or
otherwise) in any person other than a Subsidiary.
Company has heretofore made available to Parent or its representatives
true and complete copies of Company's articles of incorporation and bylaws, and
the articles of incorporation and bylaws (or comparable organization documents)
of each Subsidiary, in each case as currently in effect.
Section 3.2.......Corporate Authorization.
(a) The execution, delivery and performance by Company of this Agreement and the
consummation by Company of the transactions contemplated hereby are within
Company's corporate powers and have been duly authorized by all necessary
corporate action required to be taken by Company, except actions by the
shareholders as set forth in the next succeeding sentence of this Section
3.2(a). The approval by the holders of a majority of the votes entitled to be
cast on the Plan of Merger (the "Company Requisite Vote") is the only vote of
any class or series of Company's capital stock necessary to approve and adopt
this Agreement, the Plan of Merger and the transactions contemplated thereby.
This Agreement has been duly executed and delivered by Company and constitutes a
valid and binding agreement of Company, enforceable against Company in
accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including concepts of materiality, reasonableness, good
faith and fair dealing, regardless of whether in a proceeding at equity or at
law).
(b) The Board of Directors of Company (the "Company Board"), at a meeting duly
called and held on January 25, 2001, duly adopted resolutions (i) authorizing
the execution and delivery of this Agreement, (ii) adopting the plan of merger
attached hereto as Exhibit B ("Plan of Merger"), (iii) approving the Merger,
(iv) determining that the terms of the Merger are fair to and in the best
interest of Company and its shareholders and (v) recommending that the
shareholders of Company approve this Agreement, the Merger and the Plan of
Merger. The Company Board has directed that this Agreement and the Plan of
Merger be submitted to the shareholders of Company for their approval.
Notwithstanding the foregoing or any other provision of this Agreement to the
contrary, Company Board shall be permitted to withdraw, modify or change any
actions described in clauses (ii)-(v) of the first sentence of this Section
3.2(b) if and to the extent that the Company Board, upon receipt of a Superior
Proposal, and after consultation with outside legal counsel, determines in its
good faith judgment that such action is necessary for the Company Board to
comply with its duties to Company's shareholders under applicable law; provided,
however, that prior to publicly withdrawing, modifying or changing its
recommendation in favor of approving this Agreement, the Merger and the Plan of
Merger, Company shall have given Parent at least seventy-two hours' prior
written notice thereof and the opportunity to meet with Company and its counsel
and financial advisors.
Section 3.3.......Governmental Authorization. The execution, delivery and
performance by Company of this Agreement, and the consummation by Company of the
transactions contemplated hereby, require no consent, approval, order or
authorization of or other action by or in respect of, or registration,
qualification, declaration or filing with, any federal, state or local
government or any court, administrative agency or commission or other
governmental agency or authority (a "Governmental Authority") other than: (a)
the filing of articles of merger with respect to the Merger by the Secretary of
State of the State of North Carolina and appropriate documents with the relevant
authorities of other states in which Company is qualified to do business; (b)
compliance with any applicable requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and similar state
antitrust statutes; (c) compliance with any applicable requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "1934 Act") and similar state securities laws; (d)
those that may be required solely by reason of Parent's or Merger Subsidiary's
(as opposed to any other third party's) participation in the transactions
contemplated by this Agreement; (e) actions or filings which, if not taken or
made, would not, individually or in the aggregate, have a Material Adverse
Effect on Company; and (f) filings and notices not required to be made or given
until after the Effective Time.
Section 3.4.......Non-Contravention. Except as set forth in Section 3.4 of the
Company Disclosure Schedule, the execution, delivery and performance by Company
of this Agreement do not, and the consummation by Company of the transactions
contemplated hereby will not: (a) assuming receipt of the approval of
shareholders referred to in Section 3.2(a), contravene or conflict with the
articles of incorporation, bylaws or similar organizational documents of Company
or any of its Subsidiaries; (b) assuming receipt of the approval of shareholders
referred to in Section 3.2(a) and compliance with the matters referred to in
Section 3.3, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to Company or its Subsidiaries; (c) require any consent or
other action by any person under, constitute a default (or an event which with
notice, the lapse of time or both would become a default) under or give rise to
a right of termination, modification, cancellation or acceleration of any right
or obligation of Company or any of its Subsidiaries or to a loss of any benefit
to which Company or any of its Subsidiaries is entitled under any provision of
any agreement, contract, commitment, arrangement, lease, undertaking or other
instrument binding upon Company or any of its Subsidiaries (a "Company
Agreement") or any Permit or other similar authorization held by Company or any
of its Subsidiaries; (d) result in the triggering of any payment or other
obligation under any provision of any Company Agreement or any Permit or similar
authorization held by Company or any of its Subsidiaries; or (e) result in the
creation or imposition of any Lien on any asset of Company or any of its
Subsidiaries other than a Permitted Lien; all except for such contraventions,
conflicts or violations referred to in clause (b) or failures to obtain any
consents or other actions by any person or any defaults, rights of termination,
modification, cancellation or acceleration or losses referred to in clause (c)
that would not, individually or in the aggregate, have a Material Adverse Effect
on Company. For purposes of this Agreement, "Lien" means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset, and "Permitted Liens" means (i) Liens
disclosed in the Company SEC Documents filed prior to the date hereof, (ii)
Liens that are not, individually or in the aggregate, material in character,
amount or extent and that do not materially detract from the value or materially
interfere with the present use of the assets subject thereto or affected
thereby, (iii) Liens for current Taxes not yet due and payable and (iv) Liens
for mechanics' or materialmen's liens arising in the ordinary course of business
with respect to obligations that are not past due or which are being contested
in good faith.
Section 3.5.......Capitalization of Company.
(a) The authorized capital stock of Company consists of 20,000,000 shares of
Company Common Stock. As of the close of business on January 25, 2001, 2,420,662
shares of Company Common Stock were issued and outstanding, including 20,200
shares of restricted stock granted under the Company Incentive Plan, and 407,600
shares of Company Common Stock were reserved for issuance upon exercise of
outstanding Options granted under the Company Incentive Plan. Section 3.5 of the
Company Disclosure Schedule contains a true, correct and complete list of all
outstanding Options, the holders of such Options and the exercise price thereof.
All the outstanding shares of Company Common Stock are, and all shares which may
be issued pursuant to the Company Incentive Plan will be, when issued in
accordance with the terms thereof, duly authorized, validly issued, fully paid
and nonassessable. No shares of Company Common Stock have been, or upon exercise
of Options will be, issued in violation of preemptive rights, rights of first
refusal or similar rights. Except as set forth in the first sentence of this
Section 3.5(a), there are outstanding (i) no shares of capital stock or other
voting securities of Company, (ii) no securities of Company convertible into or
exchangeable for shares of capital stock or voting securities of Company, (iii)
no phantom shares, stock appreciation rights or similar equity-based rights and
(iv) no options, warrants or other rights to acquire from Company, and no
preemptive or similar rights, subscriptions or other rights, convertible
securities, agreements, arrangements or commitments of any character, relating
to the capital stock of Company, obligating Company to issue, transfer or sell
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Company or obligating
Company to grant, extend or enter into any such option, warrant, subscription or
other right, convertible security, agreement, arrangement or commitment (the
items in clauses (i), (ii), (iii) and (iv) being referred to collectively as the
"Company Securities"). Except as set forth in Section 3.5 of the Company
Disclosure Schedule, none of Company or its Subsidiaries has any contractual
obligation to redeem, repurchase or otherwise acquire any Company Securities or
any Company Subsidiary Securities, including as a result of the transactions
contemplated by this Agreement.
(b) There are no voting trusts or other agreements or understandings to which
Company or any of its Subsidiaries is a party with respect to the voting of the
capital stock of Company or any of its Subsidiaries other than the Voting
Agreements.
(c) There are no bonds, debentures, notes or other indebtedness of Company
having the right to vote (or convertible into securities having the right to
vote) on any matters on which shareholders of Company may vote.
(d) Without expanding or limiting the effect of the penultimate sentence of
Section 3.5(a), Company has not entered into, and the Company Board has not
adopted or authorized the adoption of, a shareholder rights plan or similar
agreement.
Section 3.6.......Capitalization of Subsidiaries. All the outstanding shares of
capital stock of, or other ownership interests in, each Subsidiary of Company
are owned (of record and beneficially) by Company, directly or indirectly, free
and clear of any consensual Lien (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other ownership
interests) other than a Permitted Lien. There are no outstanding (i) securities
of Company or any of its Subsidiaries convertible into or exchangeable for
shares of capital stock or other voting securities or ownership interests in any
Subsidiary of Company, or (ii) options or other rights to acquire from Company
or any of its Subsidiaries, and no other obligation of Company or any of its
Subsidiaries to issue, any capital stock, voting securities or other ownership
interests in, or any securities convertible into or exchangeable for, any
capital stock, voting securities or ownership interests in, any Subsidiary of
Company (the items in clauses (i) and (ii) being referred to collectively as the
"Company Subsidiary Securities").
Section 3.7.......SEC Filings.
(a) Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Securities and Exchange Commission
(the "SEC") since January 1, 1997. True, complete and correct copies of all such
filings, including exhibits, made by Company since such date (the "Company SEC
Documents") have been furnished to Parent.
(b) As of its filing date, each Company SEC Document filed pursuant to the 1934
Act complied in all material respects with the requirements of the 1934 Act and
did not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except to the
extent that such statements have been modified or superseded by a later filed
Company SEC Document.
(c) Each Company SEC Document that is a registration statement, as amended or
supplemented, if applicable, filed pursuant to the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (the "1933 Act"),
complied in all material respects with the requirements of the 1933 Act and as
of the date such registration statement or amendment became effective did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, except to the extent that such statements have been modified or
superseded by a later filed Company SEC Document.
Section 3.8.......Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Company
included in Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 and its Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2000 (the "Company 10-Q"), respectively, comply in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles ("GAAP") (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the consolidated financial position of
Company and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the periods then ended
(subject to normal year-end adjustments in the case of the unaudited interim
financial statements that are not likely to be material to Company and its
Subsidiaries as a whole). For purposes of this Agreement, "Company Balance
Sheet" means the consolidated balance sheet of Company as of September 30, 2000
set forth in the Company 10-Q.
Section 3.9.......Disclosure Documents. None of the information supplied or to
be supplied by Company for inclusion or incorporation by reference in any
documents filed or to be filed with the SEC in connection with the transactions
contemplated hereby, including the proxy statement of Company to be filed with
the SEC in connection with the Merger, and any amendment or supplement thereto
(the "Company Proxy Statement"), will, at the respective times such documents
are filed and, in the case of the Company Proxy Statement, the date the Company
Proxy Statement or any such amendment or supplement is first mailed to
shareholders of Company and at the time such shareholders vote on the adoption
and approval of this Agreement, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company Proxy Statement will comply in all material respects
with the applicable requirements of the 1934 Act and the NCBCA. No
representation or warranty is made by Company with respect to statements made or
incorporated by reference in the Company Proxy Statement based on information
supplied by Advantage, Parent or Merger Subsidiary specifically for inclusion or
incorporation by reference in the Company Proxy Statement.
Section 3.10......Absence of Certain Changes. Except as disclosed in the Company
SEC Documents filed prior to the date of this Agreement or as disclosed in
Section 3.10 of the Company Disclosure Schedule, since September 30, 2000,
Company and its Subsidiaries have conducted their business in the ordinary
course consistent with past practice, and there has not been:
(a) any event, occurrence or development which, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect on Company;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Company other than
quarterly cash dividends in an amount not in excess of $0.0775 per share, or any
repurchase, redemption or other acquisition by Company or any of its
Subsidiaries of any outstanding shares of capital stock or other equity
securities of, or other ownership interests in, Company or any of its
Subsidiaries;
(c) any amendment of any term of any outstanding security of Company or any of
its Subsidiaries that would materially increase the obligations of Company or
such Subsidiary under such security;
(d) any (i) incurrence or assumption by Company or any of its Subsidiaries of
any indebtedness for borrowed money other than under existing credit facilities
(or any renewals, replacements or extensions that do not increase the aggregate
commitments thereunder) in the ordinary course of business consistent with past
practice or (ii) guarantee, endorsement or other incurrence or assumption of
liability (whether directly, contingently or otherwise) by Company or any of its
Subsidiaries for the obligations of any other person (other than any
wholly-owned Subsidiary of Company), other than in the ordinary course of
business consistent with past practice;
(e) any creation or assumption by Company or any of its Subsidiaries of any Lien
on any asset of Company or any of its Subsidiaries other than a Permitted Lien
incurred in the ordinary course of business consistent with past practice;
(f) any making of any loan, advance or capital contribution to or investment in
any person by Company or any of its Subsidiaries other than (i) any acquisition
permitted by Section 5.1, (ii) loans, advances or capital contributions to or
investments in wholly-owned Subsidiaries of Company or (iii) loans or advances
to employees of Company or any of its Subsidiaries made in the ordinary course
of business consistent with past practice;
(g) any (i) acquisition or disposition of any assets or business of the Company
or any of its Subsidiaries except as permitted by Section 5.1 or (ii)
modification, amendment, assignment, termination or relinquishment by Company or
any of its Subsidiaries of any contract, license or other right that,
individually or in the aggregate, would have a Material Adverse Effect on
Company, other than, in the case of clauses (i) or (ii) of this Section 3.10(g),
transactions, commitments, contracts or agreements in the ordinary course of
business consistent with past practice and those contemplated by this Agreement;
(h) any revaluing in any material respect of the assets of Company or any of its
Subsidiaries, including without limitation writing down the value of any assets
or inventory or writing off notes or accounts receivable, other than in the
ordinary course of business consistent with past practices or as required by
GAAP;
(i) any material change in any method of accounting or accounting principles or
practice by Company or any of its Subsidiaries, except for any such change
required by reason of a change in GAAP;
(j) any (i) grant of the right to receive any severance, retention or
termination pay to any current or former director, officer or employee of
Company or any of its Subsidiaries, (ii) entering into of any employment,
deferred compensation or other similar agreement (or any amendment to any such
existing agreement) with any current or former director, officer or employee of
Company or any of its Subsidiaries, (iii) increase in or acceleration in vesting
of benefits payable under any existing severance or termination pay policies or
employment agreements or (iv) increase or acceleration in vesting or payment of
compensation, bonus or other benefits payable to current or former directors,
officers or employees of Company or any of its Subsidiaries other than, in the
case of clause (iv) only, normal increases in compensation, bonus or other
benefits payable to employees of Company or any of its Subsidiaries in the
ordinary course of business consistent with past practice or merit increases in
salaries of employees at regularly scheduled times in customary amounts
consistent with past practices;
(k) any material labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to organize
any employees of Company or any Subsidiary, which employees were not subject to
a collective bargaining agreement at December 31, 1999, or any material
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees;
(l) any loss or termination of, or a material adverse change in the relationship
with, any (i) customer that accounted for more than two percent (2%) of
Company's revenues in the year ended December 31, 1999 or 2000, or is, as of the
date hereof, expected to account for more than two percent (2%) of Company's
revenues for the year ended December 31, 2001, or (ii) supplier that,
individually or in the aggregate, has resulted or would reasonably be expected
to result in a Material Adverse Effect;
(m) any material delay or postponement, outside the ordinary course of business,
in the payment of accounts payable and other liabilities;
(n) any action which, if it had been taken after the date hereof, would have
required the consent of Parent under Section 5.1 hereof; or
(o) any agreement to take any actions specified in this Section 3.10, except for
this Agreement.
Section 3.11......No Undisclosed Material Liabilities. Except as permitted by
Section 3.10(d), there have been no liabilities or obligations (whether pursuant
to contracts or otherwise) of any kind whatsoever incurred by Company or any of
its Subsidiaries since September 30, 2000, whether accrued, contingent,
absolute, determined, determinable or otherwise, other than:
(a) liabilities or obligations disclosed or provided for in the Company Balance
Sheet or in the notes thereto, in the Company SEC Documents filed prior to the
date hereof or on Section 3.11 of the Company Disclosure Schedule;
(b) liabilities or obligations, other than liabilities or obligations referred
to in clause (c) of this Section 3.11, incurred in the ordinary course of
business;
(c) liabilities and obligations arising out of any breach of contract, breach of
warranty, tort, injury caused to another, lawsuit or violation of law that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect on Company;
(d) liabilities and obligations not incurred in the ordinary course of business
that are not in excess of $50,000 in the aggregate; and
(e) liabilities or obligations under this Agreement or incurred in connection
with the transactions contemplated hereby.
Section 3.12......Litigation. There is no action, suit, investigation or
proceeding (collectively, "Proceeding") pending against, or to the knowledge of
Company, threatened against or affecting, Company or any of its Subsidiaries or
any of their respective properties which, individually or in the aggregate,
would have a Material Adverse Effect on Company, nor is there any judgment,
decree, injunction, rule that names Company or any Subsidiary or otherwise is
specific to Company or any Subsidiary or order of any Governmental Authority or
arbitrator outstanding against Company or any of its Subsidiaries having any
such effect. No Governmental Entity has indicated in writing addressed to
Company or any Subsidiary an intention to conduct any audit, investigation or
other review with respect to Company or any of its Subsidiaries which
investigation or review, individually or in the aggregate, would have a Material
Adverse Effect on Company. Each currently pending Proceeding seeking damages in
excess of $50,000 has been timely reported to all applicable insurance carriers
and no reservation of rights or denial of coverage has been issued by any such
carrier.
Section 3.13......Taxes. Except as set forth in Section 3.13 of the Company
Disclosure Schedule:
(a) Company and each of its Subsidiaries, and each affiliated group (within the
meaning of Section 1504 of the Code) of which Company or any of its Subsidiaries
is or has been a member, has timely filed (or has had timely filed on its
behalf) all material Tax Returns required by applicable law to be filed by it,
and all such material Tax Returns are true, correct and complete in all material
respects;
(b) Company and each of its Subsidiaries has timely paid (or has had paid on its
behalf) all Taxes shown as due on their respective Tax Returns;
(c) The federal income Tax Returns of Company have been examined and settled
with the Internal Revenue Service (the "Service") (or the applicable statutes of
limitation for the assessment of federal income Taxes for such periods have
expired) for all years through December 31, 1995;
(d) There are no Liens for Taxes other than Permitted Liens on any of the assets
of Company or its Subsidiaries;
(e) Company and its Subsidiaries have complied in all material respects with all
applicable laws, rules and regulations relating to the payment and withholding
of Taxes;
(f) None of Company or its Subsidiaries is a party to any tax allocation, tax
sharing, tax indemnity or similar agreement (whether or not in writing),
arrangement or practice with respect to Taxes (including any adverse pricing
agreement, closing agreement or other agreement relating to Taxes with any
taxing authority), except among themselves;
(g) No federal, state, local or foreign audits or administrative proceedings are
presently pending with regard to a material amount of Taxes or a material Tax
Return of Company or its Subsidiaries, and none of them has received a written
notice or has any knowledge of any proposed audit or proceeding;
(h) With respect to any period for which Tax Returns have not yet been filed or
for which Taxes are not yet due and payable, Company and its Subsidiaries have
made due and sufficient accruals for such Taxes in their respective books and
records and financial statements; and
(i) No payment which Company or its Subsidiaries is obligated to pay to any
current or former director, officer, employee or independent contractor pursuant
to the terms of an employment agreement, severance agreement or otherwise will
constitute an excess parachute payment as defined in Section 280G of the Code or
will be non-deductible pursuant to Section 162(m) of the Code.
"Taxes" shall mean any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, goods and services, service use, license, value added, capital,
net worth, payroll, profits, franchise, transfer and recording taxes, fees and
charges, and any other taxes, assessment or similar charges imposed by the
Service or any other taxing authority (whether domestic or foreign, including
any state, county, local or foreign government or any subdivision or taxing
agency thereof (including a United States possession)) (a "Taxing Authority"),
whether computed on a separate, consolidated, unitary, combined or any other
basis; and such term shall include any interest, whether paid or received,
fines, penalties or additional amounts, and any joint, several and/or transferee
liabilities, attributable to, or imposed upon, or with respect to, any such
taxes, charges, fees, levies or other assessments. "Tax Return" shall mean any
report, return, document, declaration or other information or filing required to
be supplied to any Taxing Authority in any jurisdiction (foreign or domestic)
with respect to Taxes, including information returns, any documents with respect
to or accompanying payments of estimated Taxes, or with respect to or
accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information.
Section 3.14......Employee Benefit Plans; ERISA.
(a) Except as set forth in Section 3.14(a) of the Company Disclosure Schedule,
there are no employee benefit plans (including any plans for the benefit of
directors or former directors), arrangements, practices, contracts or agreements
(including employment agreements and severance agreements, incentive
compensation, bonus, stock option, stock appreciation rights and stock purchase
plans) of any type (including plans described in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not
subject to ERISA), maintained by Company, any of its Subsidiaries or any trade
or business, whether or not incorporated (an "ERISA Affiliate"), that together
with Company would be deemed a "controlled group" within the meaning of Section
4001(a)(14) of ERISA, or with respect to which Company or any of its
Subsidiaries has or may have a liability (the "Company Benefit Plans"). Except
as disclosed in Section 3.14(a) of the Company Disclosure Schedule (or as
otherwise permitted by this Agreement): (1) neither Company nor any ERISA
Affiliate has any formal plan or commitment, whether legally binding or not, to
create any additional Company Benefit Plan or materially modify or change any
existing Company Benefit Plan that would affect any employee or terminated
employee of Company or any ERISA Affiliate; and (2) since September 30, 2000,
there has been no material change, amendment, modification to, or adoption of,
any Company Benefit Plan. Company has made available, or has caused to be made
available, to Parent (i) current, accurate and complete copies of all documents
embodying each Company Benefit Plan, including all amendments thereto, written
interpretations thereof and trust or funding agreements with respect thereto;
(ii) the two most recent annual actuarial valuations, if any, prepared for each
Company Benefit Plan; (iii) the two most recent annual reports (Series 5500 and
all schedules thereto), if any, required under ERISA in connection with each
Company Benefit Plan or related trust; (iv) a statement of alternative form of
compliance pursuant to Department of Labor Regulation ss. 2520.104-23, if any,
filed for each Company Benefit Plan that is an "employee pension benefit plan"
as defined in Section 3(2) of ERISA for a select group of management or highly
compensated employees; (v) each material communication received by or furnished
since January 1, 1996 to Company or any ERISA Affiliate from the Service,
Pension Benefit Guaranty Corporation, the Department of Labor or any other
Governmental Authority with respect to each Company Benefit Plan, including the
most recent determination letter received from the Service, if any, for each
Company Benefit Plan and related trust which is intended to satisfy the
requirements of Section 401(a) of the Code; (vi) if the Company Benefit Plan is
funded, the most recent annual and periodic accounting of such Company Benefit
Plan assets; (vii) the most recent summary plan description together with the
most recent summary of material modifications, if any, required under ERISA with
respect to each Company Benefit Plan; and (viii) all summary plan descriptions
and all other material written communications distributed to employees since
January 1, 1996 relating to any Company Benefit Plan.
(b) With respect to each Company Benefit Plan, except as specifically disclosed
in Section 3.14(b) of the Company Disclosure Schedule: (i) if intended to
qualify under Section 401(a) of the Code, such plan so qualifies, and since its
inception has been so qualified, and a determination letter has been issued by
the Service to the effect that each such Company Benefit Plan is so qualified
and that each trust forming a part of any such Company Benefit Plan is exempt
from taxation under Section 501(a) of the Code; (ii) such plan has been
administered in compliance in all material respects with its terms and
applicable law; (iii) no non-exempt prohibited transaction within the meaning of
Section 406 of ERISA has occurred; (iv) no Lien imposed under the Code or ERISA
exists; (v) all contributions and premiums due (including any extensions for
such contributions and premiums) with respect to all periods prior to the
Effective Time (on a pro rata basis consistent with past practice, where
otherwise accrued at year-end) have been or will be paid in full prior to the
Effective Time or adequately reserved for in Company's financial statements; and
(vi) there are no actions, proceedings, arbitrations, suits or claims pending
or, to the knowledge of Company, threatened (other than routine claims for
benefits) against Company or any ERISA Affiliate or any administrator, trustee
or other fiduciary of any Company Benefit Plan.
(c) Except as specifically disclosed in Section 3.14(c) of the Company
Disclosure Schedule, neither Company nor any ERISA Affiliate has incurred any
liability, direct or indirect, contingent or otherwise, under Title IV of ERISA
(including Sections 4063-4064 and 4069 of ERISA) or Section 302 of ERISA or
Section 412 of the Code that has not been satisfied in full prior to the
Effective Time except for any such liability that has been reflected on the
Company Balance Sheet. No Company Benefit Plan is subject to Section 412 of the
Code, Section 302 of ERISA or Title IV of ERISA.
(d) With respect to each Company Benefit Plan that is a "welfare plan" (as
defined in Section 3(l) of ERISA), except as specifically disclosed in Section
3.14(d) of the Company Disclosure Schedule, no such plan provides medical or
death benefits with respect to current or former employees (and their
beneficiaries and dependents) of Company or any of its Subsidiaries beyond their
termination of employment, other than as may be required under Part 6 of Title I
of ERISA.
(e) Except with respect to payments under the agreements and programs specified
in Section 3.14(e) of the Company Disclosure Schedule, the consummation of the
transactions contemplated by this Agreement will not entitle any individual to
severance pay or any tax "gross-up" payments with respect to the imposition of
any tax pursuant to Section 4999 of the Code or accelerate the time of payment
or vesting, or increase the amount, of compensation or benefits due to any
individual with respect to any Company Benefit Plan.
(f) Except as disclosed in Schedule 3.14(f) of the Company Disclosure Schedule,
none of Company, the ERISA Affiliates or any of their respective predecessors
has ever contributed to, contributes to, has ever been required to contribute
to, or otherwise participated in or participates in or in any way, directly or
indirectly, has any liability with respect to any "multiemployer plan" (within
the meaning of Section (3)(37) or 4001(a)(3) of ERISA or Section 414(f) of the
Code) or any single employer pension plan (within the meaning of Section
4001(a)(15) of ERISA) which is subject to Sections 4063 and 4064 of ERISA.
Company and each ERISA Affiliate has complied in all material respects with the
requirements of Section 4980B of the Code and Title I, Subtitle B, Part 6 of
ERISA. Each Company Benefit Plan may be unilaterally terminated and/or amended
by Company at any time without damage or penalty. Neither Company nor any ERISA
Affiliate has any unfunded liabilities pursuant to any Company Benefit Plan that
is not intended to be qualified under Section 401(a) of the Code for which due
and sufficient accruals have not been made in their respective books and records
and financial statements.
(g) Neither Company nor any of its Subsidiaries is a party to any collective
bargaining agreement. Except as would not, individually or in the aggregate,
have a Material Adverse Effect on Company, (i) there is no labor strike,
slowdown or work stoppage or lockout against Company or any of its Subsidiaries
and (ii) there is no unfair labor practice charge or complaint against or
pending before the National Labor Relations Board. Except as set forth on
Section 3.14(g) of the Company Disclosure Schedule, there is no representation,
claim or petition pending before the National Labor Relations Board and, to the
knowledge of Company, no concerted effort relating to representation exists with
respect to the employees of Company or any of its Subsidiaries. Neither Company
nor any Subsidiary has instituted any general "freeze" of, or delayed or
deferred in any material respect the grant of, any cost-of-living or other
salary adjustments for any of its employees.
Section 3.15......Compliance with Laws. Company and its Subsidiaries are in
compliance with all applicable statutes, laws, ordinances, regulations, rules,
judgments, decrees and orders of any Governmental Authority applicable to their
respective businesses or operations, except for instances of noncompliance that,
individually or in the aggregate, would not have a Material Adverse Effect on
Company.
Section 3.16......Licenses and Permits. Each of Company and its Subsidiaries has
in effect all Federal, state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises, licenses, notices, permits
and rights ("Permits") necessary for it to own, lease or operate its properties
and assets and to carry on its business as now conducted, and there has occurred
no default under any such Permit, except where the absence of or defaults under
any such Permits, individually or in the aggregate, would not have a Material
Adverse Effect on Company. No Permit is subject to revocation or forfeiture by
virtue of any existing circumstances, there is no litigation pending or, to the
knowledge of Company, threatened to modify or revoke any Permit, and no Permit
is subject to any outstanding order, decree, judgment, stipulation, or, to the
knowledge of Company, investigation that would reasonably be likely to affect
such Permit, where the effect of the foregoing, individually or in the
aggregate, would have a Material Adverse Effect on Company.
Section 3.17......No Default. Each Company Agreement is a valid, binding and
enforceable obligation of Company and, to the knowledge of Company, the other
party thereto, and in full force and effect, except where the failure to be
valid, binding and enforceable and in full force and effect would not,
individually or in the aggregate, have a Material Adverse Effect on Company.
None of Company or any of its Subsidiaries is in default or violation of any
term, condition or provision of (i) its respective articles of incorporation or
bylaws or similar organizational documents or (ii) except as disclosed in
Section 3.17 of the Company Disclosure Schedule, any Company Agreement, except
in the case of this clause (ii) for defaults or violations that, individually or
in the aggregate, have not had or would not reasonably be expected to have a
Material Adverse Effect on Company.
Section 3.18......Finders' Fees. Except for First Union Securities, Inc.
("Company Financial Advisor"), Company has not engaged any investment banker,
broker, finder, other intermediary or other person which would be entitled to
any brokerage, finder's or similar fee or commission from Company or any of its
Subsidiaries in connection with the transactions contemplated by this Agreement.
Section 3.19......Environmental Matters.
(a) Except as set forth in Schedule 3.19 of the Company Disclosure Schedule or
as disclosed in the Company SEC Documents filed prior to the date hereof:
(i) no notice, notification, demand, request for information, citation,
summons or order has been received by, no complaint has been filed
against, no penalty has been assessed against, and no investigation,
action, claim, suit, proceeding or review is pending or, to the
knowledge of Company, threatened by any person or Governmental
Authority against, Company or any of its Subsidiaries with respect to
any matters relating to or arising out of any Environmental Law which,
individually or in the aggregate, would have a Material Adverse Effect
on Company;
(ii) no Hazardous Substance has been discharged, disposed of, dumped,
injected, pumped, deposited, spilled, leaked, emitted or released at,
on or under any property now or previously owned, leased or operated by
Company or any of its Subsidiaries, or to the knowledge of Company, on
any adjacent properties, which circumstance, individually or in the
aggregate, would have a Material Adverse Effect on Company; and
(iii) there are no Environmental Liabilities that, individually or in the
aggregate, have had or would have a Material Adverse Effect on Company.
(b) For purposes of this Section, the following terms shall have the
meanings set forth below:
(i) "Environmental Laws" means any and all federal, state, local and
foreign law (including common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit, or
governmental restrictions or any agreement with any Governmental
Authority or other third party, relating to human health and safety,
the environment or to pollutants, contaminants, wastes or chemicals or
toxic, radioactive, ignitable, corrosive, reactive or otherwise
Hazardous Substances, wastes or materials;
(ii) "Environmental Liabilities" means any and all liabilities of or
relating to Company or any of its Subsidiaries of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or
otherwise, which (A) arise under or relate to matters covered by
Environmental Laws and (B) arise from actions occurring or conditions
existing on or prior to the Effective Time; and
(iii) "Hazardous Substances" means any pollutant, contaminant, waste or
chemical or any toxic, radioactive, corrosive, reactive or otherwise
hazardous substance, waste or material, or any substance having any
constituent elements displaying any of the foregoing characteristics,
including, without limitation, petroleum, its derivatives, by-products
and other hydrocarbons, or any substance, waste or material regulated
under any Environmental Laws.
(c) Company has made available to Parent each written environmental
investigation, study, audit, test, review or other analysis conducted since
January 1, 1995 of which Company has knowledge and possession in relation to the
current or prior business of Company and its Subsidiaries or any property or
facility now or previously owned or leased by Company or any Subsidiary.
Section 3.20 Title to and Condition of Assets. Company or one of its
Subsidiaries (a) has good and marketable title to or a valid leasehold interest
under a capitalized lease in all assets recorded on the Company Balance Sheet,
free and clear of all Liens other than Permitted Liens, except for assets
disposed of in the ordinary course of business consistent with past practice
since such date, and (b) has a valid leasehold or other interest in all other
assets used by it in its business, except in the case of clauses (a) or (b) of
this Section 3.20 for exceptions to the foregoing that would not, individually
or in the aggregate, have a Material Adverse Effect on Company. All of the
improvements on real property and fixtures, machinery, equipment and other
tangible personal property and assets owned or used by Company or its
Subsidiaries are in good condition and repair, except for ordinary wear and tear
not caused by neglect, and are usable in the ordinary course of business, except
for any matter otherwise covered by this sentence which would not, individually
or in the aggregate, have a Material Adverse Effect on Company.
Section 3.21 Material Contracts. As of the date hereof, except as set forth in
the Company SEC Documents filed prior to the date hereof or in Section 3.21 of
the Company Disclosure Schedule, neither Company nor any of its Subsidiaries is
a party to or bound by (a) any material contracts (as such term is defined in
Item 601(b)(10) of Regulation S-K of the SEC), (b) any agreement or other
instrument for borrowed money or guarantees thereof, (c) any agreement,
commitment, arrangement or other instrument (other than with a customer of
Company or any of its Subsidiaries) which involves the payment or receipt of
more than $500,000 per annum, (d) any agreement, commitment, arrangement or
other instrument with a customer of Company or any of its Subsidiaries which
involves the payment or receipt of more than $1,000,000 per annum or (e) any
non-competition agreements or any other agreements or arrangements that limit or
otherwise restrict Company or any of its Subsidiaries or any successor thereto
from engaging or competing in any line of business or in any geographic area
(collectively, the "Material Company Agreements").
Section 3.22 Absence of Certain Business Practices. None of Company, any of its
Subsidiaries or any directors, officers, agents or employees of Company or any
of its Subsidiaries has (i) used any funds of Company or any of its Subsidiaries
for unlawful contributions, gifts, entertainment or other unlawful expenses
related to political activity, (ii) made any unlawful payment on behalf of
Company or any of its Subsidiaries to foreign or domestic government officials
or employees or to foreign or domestic political parties or campaigns or
violated any provision of the Foreign Corrupt Practices Act of 1977, as amended,
or (iii) made any other unlawful payment on behalf of Company or any of its
Subsidiaries.
Section 3.23 Opinion of Financial Advisor. Company has received the opinion of
Company Financial Advisor to the effect that, as of the date of such opinion,
the Merger Consideration to be received by the holders of shares of Company
Common Stock in connection with the Merger is fair to such holders from a
financial point of view.
Section 3.24 Takeover Statutes. Articles 9 and 9A of the NCBCA are not
applicable to the Merger or the other transactions contemplated by this
Agreement. To Company's knowledge, no "fair price," "moratorium," "control share
acquisition" or other similar antitakeover statute or regulation enacted under
state or federal laws in the United States (each, a "Takeover Statute")
applicable to Company or any of its Subsidiaries is applicable to the Merger or
the other transactions contemplated hereby.
ARTICLE IV
Representations and Warranties of ADVANTAGE AND Parent
Advantage and Parent represent and warrant to Company that:
Section 4.1 Organization and Power. Each of Advantage, Parent and Merger
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, and has the requisite corporate or other power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted. Advantage owns all the fully-diluted equity of Advantage Management
Group, Inc., an Ohio corporation.
Section 4.2 Corporate Authorization. The execution, delivery and performance by
Advantage, Parent and Merger Subsidiary of this Agreement and the consummation
by Advantage, Parent and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Advantage, Parent and Merger
Subsidiary and have been duly authorized by all necessary corporate action,
including by resolution of the Board of Directors of Advantage and Parent. No
vote of any class or series of Advantage's or Parent's capital stock is
necessary in connection with the execution of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of Advantage, Parent and Merger Subsidiary
and constitutes a valid and binding agreement of each of Advantage, Parent and
Merger Subsidiary, enforceable against Advantage, Parent and Merger Subsidiary,
as applicable, in accordance with its terms (subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar
laws affecting creditors' rights generally from time to time in effect and to
general principles of equity, including concepts of materiality, reasonableness,
good faith and fair dealing, regardless of whether in a proceeding at equity or
at law).
Section 4.3 Governmental Authorization. The execution, delivery and performance
by Advantage, Parent and Merger Subsidiary of this Agreement, and the
consummation by Advantage, Parent and Merger Subsidiary of the transactions
contemplated hereby, require no action by or in respect of, or filing with, any
Governmental Authority other than: (a) the filing of articles of merger with
respect to the Merger by the Secretary of State of the State of North Carolina;
(b) compliance with any applicable requirements of the HSR Act and similar state
antitrust statutes; (c) compliance with any applicable requirements of the 1934
Act and similar state securities laws; (d) those that may be required solely by
reason of Company's (as opposed to any other third party's) participation in the
transactions contemplated by this Agreement; (e) actions or filings which, if
not taken or made, would not, individually or in the aggregate, have a Material
Adverse Effect on Advantage or Parent; and (f) filings and notices not required
to be made or given until after the Effective Time.
Section 4.4 Non-Contravention. The execution, delivery and performance by
Advantage, Parent and Merger Subsidiary of this Agreement do not, and the
consummation by Advantage, Parent and Merger Subsidiary of the transactions
contemplated hereby will not: (a) contravene or conflict with the articles of
incorporation, bylaws or similar organizational documents of Advantage, Parent,
Merger Subsidiary or any of their respective Subsidiaries; (b) assuming
compliance with the matters referred to in Section 4.3, contravene or conflict
with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to Advantage,
Parent or Merger Subsidiary; (c) require any consent or other action by any
person under, constitute a default (or an event which with notice, the lapse of
time or both would become a default) under or result in the triggering of any
payment or other obligations under or give rise to a right of termination,
cancellation or acceleration of any right or obligation of Advantage, Parent,
Merger Subsidiary or any of their respective Subsidiaries or to a loss of any
benefit to which Advantage, Parent, Merger Subsidiary or any of their respective
Subsidiaries is entitled under any provision of any agreement, contract,
commitment, arrangement, lease, undertaking or other instrument binding upon
Advantage, Parent, Merger Subsidiary or any of their respective Subsidiaries or
any license, franchise, permit or other similar authorization held by Advantage,
Parent, Merger Subsidiary or any of their respective Subsidiaries; or (d) result
in the creation or imposition of any Lien on any asset of Advantage, Parent,
Merger Subsidiary or any of their respective Subsidiaries, except for such
contraventions, conflicts or violations referred to in clause (b) or failures to
obtain any consents or other actions or any defaults, payments, obligations,
rights of termination, cancellation or acceleration, losses or Liens referred to
in clause (c) or (d) that would not, individually or in the aggregate, have a
Material Adverse Effect on Advantage or Parent.
Section 4.5 Litigation. There is no action, suit, investigation or proceeding
pending or, to the knowledge of Advantage or Parent, threatened against
Advantage, Parent, Merger Subsidiary or any of their respective assets or
properties to prohibit or restrain the ability of Advantage, Parent or Merger
Subsidiary to enter into this Agreement or consummate the transactions
contemplated hereby.
Section 4.6 Information Supplied. None of the information supplied or to be
supplied by Advantage, Parent and Merger Subsidiary for inclusion or
incorporation by reference in any documents filed or to be filed with the SEC in
connection with the transactions contemplated hereby, including the Company
Proxy Statement, will, at the respective times such documents are filed and, in
the case of the Company Proxy Statement, the date the Company Proxy Statement or
any amendment or supplement is first mailed to shareholders of Company and at
the time such shareholders vote on the adoption and approval of this Agreement,
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. No representation or
warranty is made by Advantage or Parent with respect to statements made or
incorporated by reference in the Company Proxy Statement based on information
supplied by Company specifically for inclusion or incorporation by reference in
the Company Proxy Statement.
Section 4.7 Financing. Advantage has delivered to Company true and correct
copies of signed letters with respect to the financing (the "Financing Letters")
obtained by it in connection with the transactions contemplated hereby. Assuming
full funding under the Financing Letters, the aggregate proceeds under the
Financing Letters will provide Parent with sufficient funds to effect all the
transactions contemplated hereby. The Financing Letters are in full force and
effect, and Advantage is not aware of any fact, occurrence or condition that
would cause the Financing Letters to be terminated or ineffective or any of the
conditions therein not to be met.
ARTICLE V
Covenants
Section 5.1 Conduct of Company. Company covenants and agrees that, from the date
hereof until the Effective Time, except as expressly provided otherwise in this
Agreement, including Sections 3.10 and 5.1 of the Company Disclosure Schedule,
or as reasonably necessary for Company to fulfill its obligations hereunder,
Company and its Subsidiaries shall conduct their business in the ordinary course
consistent with past practice and shall use their reasonable best efforts to
preserve intact their business organizations and relationships with customers,
suppliers, creditors and business partners and shall use their reasonable best
efforts to keep available the services of their present officers and employees.
Without limiting the generality of the foregoing, from the date hereof until the
Effective Time, without the prior written approval of Parent (which approval
shall not be unreasonably withheld):
(a) Company will not adopt or propose any change in its articles of
incorporation or any change in its bylaws;
(b) Company will not, and will not permit any of its Subsidiaries to, (i)
adjust, split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (ii) adopt a plan or agreement
of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of Company or any of its
Subsidiaries (other than a liquidation or dissolution of any Subsidiary or a
merger or consolidation between wholly- owned Subsidiaries);
(c) Company will not, and will not permit any of its Subsidiaries to, make any
investment in or acquisition of any business of any person or any material
amount of assets, except for (i) acquisitions for cash not to exceed $250,000 in
the aggregate for all acquisitions and (ii) without duplication, any capital
expenditure permitted by Section 5.1(j);
(d) Company will not, and will not permit any of its Subsidiaries to, sell,
lease, license, close, shut down or otherwise dispose of any assets, except
sales, leases, licenses, closings, shutdowns or other dispositions of assets in
the ordinary course of business consistent with past practice, including without
limitation the disposition of tractors and trailers in connection with the
acquisition of replacement tractors and trailers;
(e) Company will not, and will not permit any of its Subsidiaries to, declare,
set aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock other than (i) cash dividends payable
by Company in an amount not in excess of $0.0775 per share per calendar quarter
and (ii) dividends paid by any wholly-owned Subsidiary of Company to Company or
any other wholly-owned Subsidiary of Company;
(f) Company will not, and will not permit any of its Subsidiaries to, issue,
sell, transfer, pledge, dispose of or encumber any additional shares of, or
securities convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of any
class or series of Company or its Subsidiaries, other than (i) issuances of
Company Common Stock pursuant to the exercise of stock-based awards or options
(including under the plan described in Section 3.5(a)) outstanding on the date
hereof, and (ii) issuances by any Subsidiary of Company to Company or any other
wholly-owned Subsidiary of Company;
(g) Company will not, and will not permit any of its Subsidiaries to, redeem,
purchase or otherwise acquire, directly or indirectly, any of Company's capital
stock, other than the acquisition of any such stock in payment of the purchase
price or any Tax-related obligations upon exercise of stock-based awards or
options (including under the plan described in Section 3.5(a));
(h) Company will not, and will not permit any of its Subsidiaries to, move the
location, close, shut down or otherwise eliminate Company's headquarters;
(i) Company will not, and will not permit any of its Subsidiaries to, (i) except
in connection with investments or acquisitions permitted by Section 5.1(c) or
Section 5.1(j), (A) enter into (or commit to enter into) any new lease (except
pursuant to commitments for such lease entered into as of the date hereof) or
(B) purchase or acquire or enter into any agreement to purchase or acquire any
real estate (except pursuant to commitments existing as of the date hereof that
are disclosed in Section 5.1(i) of the Company Disclosure Schedule), or (ii)
except in the ordinary course of business or as otherwise permitted by this
Section 5.1, (A) enter into any contract or agreement, (B) modify, amend or
terminate any Material Company Agreement or (C) waive, release or assign any
material rights or claims;
(j) Company will not, and will not permit any of its Subsidiaries to, make any
capital expenditures except those committed to as of the date hereof, which
aggregate no more than $5,000,000;
(k) Company will not, and will not permit any of its Subsidiaries to, (i) incur
or assume any indebtedness for borrowed money other than under existing credit
facilities (or any renewals, replacements or extensions that do not increase the
aggregate commitments thereunder) in the ordinary course of business consistent
with past practice, (ii) guarantee, endorse, incur or assume (whether directly,
contingently or otherwise) the obligations of any other person (other than any
wholly-owned Subsidiary of Company), other than in the ordinary course of
business consistent with past practice, or (iii) make any loan, advance or
capital contribution to or investment in any person other than (a) any
acquisition permitted by Section 5.1(c) or Section 5.1(j) or (ii) loans,
advances, capital contributions or investment to any Subsidiaries or consistent
with past practice;
(l) Company will not, and will not permit any of its Subsidiaries to, change any
tax election, change any annual tax accounting period, change any method of tax
accounting, file any amended Tax Return, enter into any closing agreement,
settle any Tax claim or assessment, surrender any right to claim a Tax refund or
consent to any extension or waiver (other than a reasonable extension or waiver)
of the limitations period applicable to any Tax claim or assessment, if any such
action in this clause (l) would have the effect of materially increasing the
aggregate Tax liability or materially reducing the aggregate tax assets of
Company and its Subsidiaries, taken as a whole;
(m) Company will not, and will not permit any of its Subsidiaries to, (i)
increase the compensation or benefits of any director, officer or employee,
except for normal increases in the ordinary course of business consistent with
past practice or as required under applicable law or existing agreements or
commitments, (ii) accelerate the vesting, funding or payment of any compensation
payment or benefit except as required by existing agreements or commitments or
(iii) hire any employee with an annual compensation level in excess of $100,000,
except for employees who are not executive officers and are hired on an
"at-will" basis in the ordinary course of business consistent with past
practices;
(n) Company will not, and will not permit any of its Subsidiaries to, (i) amend
any existing Company Benefit Plan other than as required by law or (ii) enter
into or adopt any new employee benefit plans (including any plans for the
benefit of current or former employees or directors), arrangements, practices,
contracts or agreements (including employment agreements and severance
agreements, incentive compensation, bonus, stock option, stock appreciation
rights and stock purchase plans) of any type (including plans described in
Section 3(3) of ERISA), other than as permitted by Section 5.1(m);
(o) Company will not, and will not permit any of its Subsidiaries to, pay,
discharge, settle or satisfy any claims, litigation, arbitration, liabilities or
other controversies (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the notes
thereto) included in the Company SEC Documents or incurred in accordance with
Section 3.11, or waive any benefits of, or agree to modify in any respect, any
confidentiality, standstill or similar agreements to which Company or any of its
Subsidiaries is a party;
(p) Company will not, and will not permit any of its Subsidiaries to, accelerate
any income, postpone any expense or reverse any reserve, except on a basis
consistent with past practice or as otherwise required by law;
(q) Company will not, and will not permit any of its Subsidiaries to, revalue in
any material respect the assets of Company or any of its Subsidiaries, including
without limitation writing down the value of any assets or inventory or writing
off notes or accounts receivable, other than as required by GAAP;
(r) Company will not, and will not permit any of its Subsidiaries to,
voluntarily permit any material insurance policy naming Company or any
Subsidiary as a beneficiary or loss payable payee to be canceled or terminated;
(s) Company will not, and will not permit any of its Subsidiaries to, take, or
agree to take, any action that would materially impair the ability of Company,
Parent or Merger Subsidiary to consummate the Merger in accordance with the
terms hereof or materially delay such consummation, other than as permitted by
this Agreement;
(t) Company will not, and will not permit any of its Subsidiaries to, agree or
commit to do any of the foregoing; and
(u) Company will not, and will not permit any of its Subsidiaries to, take or
agree or commit to take any action that would make any representation and
warranty of Company hereunder inaccurate in any respect at, or as of any time
prior to, the Effective Time (or, in the case of representations and warranties
that are not qualified by reference to the term "Material Adverse Effect" and/or
derivatives or variations of such term, inaccurate in any material respect at,
or as of any time prior to, the Effective Time).
Section 5.2 Shareholder Meeting, Proxy Materials.
(a) Company shall cause a meeting of its shareholders (the "Company Shareholder
Meeting") to be duly called and held as soon as reasonably practicable (subject
to the receipt of all necessary approvals) after the date of this Agreement for
the purpose of voting on the approval and adoption of this Agreement and the
Plan of Merger (the "Company Shareholder Approval"). Except as provided in the
next sentence, the Company Board shall recommend approval and adoption of this
Agreement and the Plan of Merger by Company's shareholders. The Company Board
shall be permitted to (i) not recommend to Company's shareholders that they give
the Company Shareholder Approval or (ii) withdraw or modify in a manner adverse
to Parent its recommendation to Company's shareholders that they give the
Company Shareholder Approval, only if and to the extent that the Company Board,
upon receipt of a Superior Proposal, and after consultation with and after
taking into account the advice of outside legal counsel, determines in its good
faith judgment that such action is necessary for the Company Board to comply
with its duties to Company's shareholders under applicable law.
(b) In connection with the Company Shareholder Meeting, Company shall, as soon
as practicable following the execution of this Agreement, prepare and file with
the SEC a preliminary Company Proxy Statement and use its reasonable best
efforts to respond to any comments of the SEC and to cause the Company Proxy
Statement to be mailed to Company's shareholders as promptly as practicable
after responding to all such comments to the satisfaction of the SEC. Company
shall give Parent and its counsel the opportunity to review the Company Proxy
Statement and all amendments and supplements thereto prior to their being filed
with the SEC. Company will notify Parent promptly of the receipt of any comments
from the SEC or its staff and of any request by the SEC or its staff for
amendments or supplements to the Company Proxy Statement or for additional
information and will supply Parent with copies of all correspondence between
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Company Proxy Statement or the
Merger. If at any time prior to the Company Shareholder Meeting there shall
occur any event that should be set forth in an amendment or supplement to the
Company Proxy Statement, Company will promptly prepare and mail to its
shareholders such an amendment or supplement. Company will not mail the Proxy
Statement, or any amendment or supplement thereto, to which Parent reasonably
objects after being afforded the opportunity to review the same if such
objection reasonably relates to the accuracy or completeness in all material
respects of the disclosure set forth therein. Parent and Merger Subsidiary shall
cooperate with Company in the preparation of the Company Proxy Statement and in
responding to comments of the SEC, and Parent and Merger Subsidiary shall
promptly notify Company if any information supplied by them for inclusion in the
Company Proxy Statement shall have become false or misleading, and shall
cooperate with Company in disseminating the Company Proxy Statement, as so
amended or supplemented, to correct any such false or misleading information.
Section 5.3 Access to Information. From the date hereof until the Effective Time
and subject to applicable law, Company will give Parent, its counsel, financial
advisors, auditors and other authorized representatives (including without
limitation Parent's lenders (and such lenders' counsel)) reasonable access
during normal business hours to the offices, properties, books and records of
Company and its Subsidiaries, will furnish to Parent, its counsel, financial
advisors, auditors and other authorized representatives such financial and
operating data and other information as such persons may reasonably request and
will instruct Company's employees, auditors, counsel and financial advisors to
cooperate with Parent in its investigation of the business of Company and its
Subsidiaries. The foregoing information shall be held in confidence to the
extent required by, and in accordance with, the provisions of the letter
agreement addressed to the Company Financial Advisor executed by Advantage or
its Subsidiaries as to confidentiality and other matters (the "Advantage
Confidentiality Agreement"). Advantage, Parent and Merger Subsidiary hereby
acknowledge and agree that they and their respective Subsidiaries and affiliates
are bound by and subject to the provisions of the Advantage Confidentiality
Agreement. No investigation or information furnished pursuant to this Section
5.3 shall affect any representations or warranties made by Company in this
Agreement.
Section 5.4 No Solicitation. From the date hereof until the termination hereof,
Company will not, and will cause its Subsidiaries and the officers, directors,
employees, investment bankers, consultants and other agents of Company and its
Subsidiaries not to, directly or indirectly, take any action to solicit,
initiate, encourage or facilitate the making of any Acquisition Proposal or any
inquiry with respect thereto or engage in discussions or negotiations with any
person with respect thereto, or disclose any nonpublic information relating to
Company or any of its Subsidiaries or afford access to the properties, books or
records of Company or any of its Subsidiaries to, any person that has made any
Acquisition Proposal. Notwithstanding the foregoing, nothing contained in this
Section 5.4 shall prevent Company from furnishing nonpublic information to,
affording access to properties, books and records or entering into discussions
or negotiations with, any person in connection with a bona fide Acquisition
Proposal received from such person if (i) Company has complied with the terms of
this Section 5.4, (ii) the Company Board determines in good faith that such
Acquisition Proposal could lead to a Superior Proposal and, after consultation
with and taking into account the advice of outside legal counsel, determines in
its good faith judgment that such action is necessary for the Company Board to
comply with its duties to Company's shareholders under applicable law, (iii)
prior to furnishing nonpublic information to, affording access to properties,
books and records to or entering into discussions or negotiations with, such
person, Company receives from such person an executed confidentiality agreement
with terms no less favorable to Company than those contained in the Advantage
Confidentiality Agreement (including the standstill provisions) and (iv)
contemporaneous with furnishing any such information to such person or group,
Company furnishes such information to Parent (to the extent such information has
not been previously furnished by Company to Parent); provided, further, that
nothing contained in this Agreement shall prevent the Company Board from
complying with Rule 14e-2 or 14d-9 under the 1934 Act with regard to an
Acquisition Proposal. Company will promptly (but in any event within 48 hours)
notify (which notice shall be provided orally and in writing and shall identify
the person making such Acquisition Proposal) Parent after receipt of any
Acquisition Proposal or any amendment or change in any previously received
Acquisition Proposal, or any request for nonpublic information relating to
Company or any of its Subsidiaries or for access to the properties, books or
records of Company or any of its Subsidiaries by any person that is considering
making, or has made, an Acquisition Proposal, and shall promptly provide copies
of any proposals, indications of interest, draft agreements and correspondence
relating to such Acquisition Proposal. Company will, and will cause the other
persons listed in the first sentence of this Section 5.4 to, immediately cease
and cause to be terminated all discussions and negotiations, if any, that have
taken place prior to the date hereof with any parties with respect to any
Acquisition Proposal. Subject to compliance with their duties, as determined in
good faith by the Company Board, and subject to the exceptions set forth in this
Section 5.4, the Company Board shall not authorize Company to waive any
standstill or confidentiality provisions contained in agreements to which
Company is a party or to which Company is subject. Without limiting the
generality of the foregoing, the parties hereto understand and agree that any
violation of the restrictions of this Section 5.4 by any executive officer,
director, investment banker, consultant or other independent agent of Company or
its Subsidiaries shall be deemed to be a breach of this Section 5.4 by Company.
For purposes of this Agreement, "Acquisition Proposal" means any offer
or proposal for, or any indication of interest in, (i) a merger or other
business combination involving Company or any of its Subsidiaries, (ii) the
acquisition of any equity interest in, or a substantial portion of the assets
of, Company or any of its Subsidiaries, other than open market purchases of, or
an offer for, a bona fide de minimus equity interest, or for an amount of assets
not material to Company and its Subsidiaries taken as a whole, that Company has
no reason to believe could lead to a change in control of Company or to the
acquisition of a substantial portion of the assets of Company and its
Subsidiaries or (iii) any similar transaction the effect of which would be
reasonably likely to prohibit, restrict or delay consummation of the Merger. For
purposes of this Agreement, "Superior Proposal" means any bona fide Acquisition
Proposal on terms that the Company Board determines in its good faith judgment
(after consultation with and taking into account the advice of a financial
advisor and taking into account all the terms and conditions of the Acquisition
Proposal, including any break-up fees, expense reimbursement provisions and
conditions to and timing of consummation) are more favorable to Company's
shareholders than this Agreement and the Merger taken as a whole, and for which
financing, to the extent required, is then fully committed or reasonably
determined to be available by the Company Board.
Section 5.5 Notice of Certain Events.
(a) Company and Parent shall promptly notify each other of:
(i) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
(ii) any notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement;
(iii) any representation or warranty made by it contained in this Agreement
(disregarding all qualifications and exceptions contained therein
relating to materiality or Material Adverse Effect or any similar
standard or qualification) which becomes untrue or incorrect in any
respect that individually or in the aggregate (when taken together with
all other representations and warranties that are untrue or incorrect)
has had or would have a Material Adverse Effect on the party giving
such notice;
(iv) the failure by it to perform, or comply with, in any material respect
any of its obligations, covenants, or agreements contained in this
Agreement and such failure, either individually or in the aggregate,
has had or would have a Material Adverse Effect on the party giving
such notice; or
(v) Company obtaining knowledge of a material breach by Parent, or Parent
obtaining knowledge of a material breach by Company, of their
respective representations, warranties or covenants hereunder of which
the breaching party has not already given notice pursuant to clauses
(iii) or (iv) above.
(b) Company shall promptly notify Parent of:
(i) any notice of, or other communications relating to, a default or event
that, with notice or lapse of time or both, would become a default,
received by it or any of its Subsidiaries subsequent to the date of
this Agreement, under (1) any Material Company Agreement or (2) any
other Company Agreement if any such defaults, individually or in the
aggregate, have had or would have a Material Adverse Effect on Company;
and
(ii) any actions, suits, claims, investigations or proceedings commenced or,
to its knowledge, threatened against, relating to or involving or
otherwise affecting Company or any of its Subsidiaries which relate to
the consummation of the transactions contemplated by this Agreement.
(c) Parent shall promptly notify Company of:
(i) any actions, suits, claims, investigations or proceedings commenced or,
to its knowledge, threatened against, relating to or involving or
otherwise affecting Advantage, Parent or any of their respective
Subsidiaries which relate to the consummation of the transactions
contemplated by this Agreement; and
(ii) any fact, occurrence or condition that has caused or would be
reasonably likely to cause the Financing Letters to be terminated or
ineffective or any of the conditions contained therein not to be met.
(d) No notification under this Section 5.5 shall affect the representations,
warranties or obligations of the parties or the conditions to the obligations of
the parties hereunder, or limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
Section 5.6 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, each party will use
its reasonable best efforts in good faith to take, or cause to be taken, all
actions and to do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable under
applicable laws and regulations to consummate the Merger and the other
transactions contemplated by this Agreement, including using reasonable best
efforts to accomplish the following: (i) the taking of all reasonable acts
necessary to cause the conditions to Closing to be satisfied, (ii) the obtaining
of all necessary actions or nonactions, waivers, consents and approvals from
Governmental Authorities and the making of all necessary registrations and
filings (including filings with Governmental Authorities, if any) and the taking
of all reasonable steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Authority, (iii)
the obtaining of all necessary consents, approvals or waivers from third parties
(provided that if obtaining any such consent, approval or waiver would require
any action other than the payment of a nominal amount, such action shall be
subject to the consent of Parent, not to be unreasonably withheld), (iv) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Authority
vacated or reversed and (v) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement. Company shall give Parent the
opportunity to participate, on an advisory basis, in the defense of any
shareholder litigation against Company and/or its directors relating to the
transactions contemplated by this Agreement. Subject to the terms and conditions
of this Agreement, each party shall also refrain from taking, directly or
indirectly, any action contrary or inconsistent with the provisions of this
Agreement, including action that would impair such party's ability to consummate
the Merger and the other transactions contemplated hereby.
(b) In furtherance and not in limitation of the foregoing, each party hereto
agrees to make an appropriate filing of a Notification and Report Form pursuant
to the HSR Act and any other applicable Antitrust Law with respect to the
transactions contemplated hereby as promptly as practicable after the date
hereof and to supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR Act or any other
applicable Antitrust Law and to take all other actions reasonably necessary to
cause the expiration or termination of the applicable waiting periods under the
HSR Act and any other applicable Antitrust Law as soon as practicable. For
purposes of this Agreement, "Antitrust Law" means the ▇▇▇▇▇▇▇ Act, as amended,
the ▇▇▇▇▇▇▇ Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other Federal, state and foreign, if any, statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.
(c) Each of Parent and Company shall, in connection with the efforts referenced
in Section 5.6(b) to obtain all requisite approvals and authorizations for the
transactions contemplated by this Agreement under the HSR Act or any other
applicable Antitrust Law, use its reasonable best efforts to (i) cooperate in
all respects with each other in connection with any filing or submission and in
connection with any investigation or other inquiry, including any proceeding
initiated by a private party; (ii) keep the other party informed in all material
respects of any material communication received by such party from, or given by
such party to, the Federal Trade Commission (the "FTC"), the Antitrust Division
of the Department of Justice (the "DOJ") or any other Governmental Authority and
of any material communication received or given in connection with any
proceeding by a private party, in each case regarding any of the transactions
contemplated hereby; and (iii) unless prohibited by applicable law, permit the
other party to review any material communication given by it to, and consult
with each other in advance of any meeting or conference with, the FTC, the DOJ
or any such other Governmental Authority or, in connection with any proceeding
by a private party, with any other person, and to the extent permitted by the
FTC, the DOJ or such other applicable Governmental Authority or other person,
give the other party the opportunity to attend and participate in such meetings
and conferences.
(d) Nothing in this Agreement shall require any of Parent and its Subsidiaries
or Company and its Subsidiaries to sell, hold separate or otherwise dispose of
or conduct any portion of their business in a specified manner, or agree to
sell, hold separate or otherwise dispose of or conduct any portion of their
business in a specified manner, or permit the sale, holding separate or other
disposition of, any assets of Parent, Company or their respective Subsidiaries
or the conduct of their business in a specified manner, whether as a condition
to obtaining any approval from a Governmental Authority or any other person or
for any other reason, if such sale, holding separate or other disposition or the
conduct of their business in a specified manner would reasonably be expected to
have a Material Adverse Effect on Parent and its Subsidiaries (including the
Surviving Corporation and its Subsidiaries), taken together, after giving effect
to the Merger.
Section 5.7 Cooperation. Without limiting the generality of Section 5.6, the
parties shall together, or pursuant to an allocation of responsibility to be
agreed between them, coordinate and cooperate (i) in connection with the
preparation of the Company Proxy Statement, (ii) in determining whether any
action by or in respect of, or filing with, any Governmental Authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement, and (iii) in
seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith or with the
Company Proxy Statement and seeking timely to obtain any such actions, consents,
approvals or waivers.
Section 5.8 Public Announcements. So long as this Agreement is in effect, the
parties will consult with each other before issuing any press release or making
any SEC filing or other public statement (including any broadly issued statement
or announcement to employees) with respect to this Agreement or the transactions
contemplated hereby and, except as may be required by applicable law, will not
issue any such press release or make any such SEC filing or other public
statement prior to such consultation and providing the other party with a
reasonable opportunity to comment thereon.
Section 5.9 Further Assurances. At and after the Effective Time, the officers
and directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of Company or Merger Subsidiary, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of Company or Merger Subsidiary, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of Company acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger.
Section 5.10 Director and Officer Liability.
(a) Parent agrees that at all times after the Effective Time, it shall, or shall
cause the Surviving Corporation, its Subsidiaries and their respective
successors to, indemnify (subject to the provisions of Section 5.10(d)) each
person who is now, or has been at any time prior to the date hereof, an
employee, agent, director or officer of Company or of any of its Subsidiaries,
its successors and assigns (individually, an "Indemnified Party" and
collectively, the "Indemnified Parties"), with respect to any claim, liability,
loss, damage, judgment, fine, penalty, amount paid in settlement or compromise,
cost or expense (including reasonable fees and expenses of legal counsel),
against any Indemnified Party in his or her capacity as an employee, agent,
officer or director of Company or its Subsidiaries, whenever asserted or
claimed, based in whole or in part on, or arising in whole or in part out of,
the transactions contemplated by this Agreement, whether commenced, asserted or
claimed before or after the Effective Time, including liability arising under
the 1933 Act, the 1934 Act or state law. Notwithstanding the foregoing, Parent
shall not be required to indemnify any Indemnified Party for any liability or
expense incurred by such Indemnified Party on account of activities which were
at the time taken known or believed by such Indemnified Party to be clearly in
conflict with the best interests of Company. Parent's and the Surviving
Corporation's obligation under this Section 5.10(a) shall continue for a period
of six years following the Effective Time; provided, however, that if any claim
is asserted or any situation, proceeding or investigation commenced within such
six-year period, all rights to indemnification with respect thereto shall
continue until the final disposition thereof.
(b) Parent shall, or shall cause the Surviving Corporation to, maintain in
effect for not less than six years after the Effective Time the current policies
of directors' and officers' liability insurance maintained by Company and its
Subsidiaries on the date hereof (provided that Parent may substitute therefor
policies with reputable and financially sound carriers having at least the same
coverage and amounts thereof and containing terms and conditions which are no
less advantageous in the aggregate to the persons currently covered by such
policies as insured, except to the extent any provisions in such insurance are
no longer generally available in the market) with respect to facts or
circumstances occurring at or prior to the Effective Time; provided that if the
aggregate annual premiums for such insurance during such six-year period shall
exceed 250% of the per annum rate of the aggregate premium currently paid by
Company and its Subsidiaries for such insurance on the date of this Agreement
(which Company represents is no more than $80,000), then Parent shall cause the
Surviving Corporation to, and the Surviving Corporation shall, obtain as much
coverage as can reasonably be obtained at an annual premium equal to 250% of
such rate; and provided further that notwithstanding the foregoing, Parent may
satisfy its obligations under this Section 5.10(b) by purchasing a "tail" policy
under Company's existing directors' and officers' insurance policy that (i) has
an effective term of six years from the Effective Time, (ii) covers those
persons who are currently covered, or will be covered on or prior to the
Effective Time, by Company's directors' and officers' insurance policy in effect
on the date hereof for actions and omissions occurring on or prior to the
Effective Time and (iii) contains terms and conditions (including without
limitation coverage amounts) that are at least as favorable in the aggregate as
the terms and conditions of Company's directors' and officers' insurance policy
in effect on the date hereof. Parent agrees to pay all expenses (including fees
and expenses of counsel) that may be incurred by any Indemnified Party in
successfully enforcing the indemnity or other obligations under this Section
5.10. The rights under this Section 5.10 are in addition to rights that an
Indemnified Party may have under the articles of incorporation, bylaws, or other
similar organizational documents of Company or any of its Subsidiaries or North
Carolina law. The rights under this Section 5.10 shall survive consummation of
the Merger and are expressly intended to benefit each Indemnified Party. Parent
agrees to cause the Surviving Corporation and any of its Subsidiaries (or their
successors) to maintain in effect, for a period of no less that the longer of
(i) six years following the Effective Time and (ii) the termination of any
applicable statute of limitations for any possible claims or causes of actions
against the Indemnified Parties, the provisions of the articles of incorporation
and bylaws of Company existing on the date hereof providing for exculpation or
indemnification of any Indemnified Parties (including with respect to facts or
circumstances occurring at or prior to the Effective Time and the advancement of
expenses incurred in the defense of any action or suit) to the fullest extent
permitted by law, and during such period the articles of incorporation and
bylaws of the Surviving Corporation shall not, unless required by applicable
law, be amended or modified to reduce the rights of indemnity or exculpation
afforded to the Indemnified Parties, or the ability of the Surviving Corporation
to indemnify them, nor to hinder, delay or make more difficult the exercise of
such rights of indemnity or exculpation or the ability to indemnify or
exculpate.
(c) Without limiting the rights of any Indemnified Party under Section 5.10(b),
any Indemnified Party wishing to claim indemnification under Section 5.10(a)
shall promptly notify the Surviving Corporation, upon learning of any such
claim, action, suit, proceeding or investigation, but the failure to so notify
shall not relieve Parent or the Surviving Corporation of any liability it may
have to such Indemnified Party if such failure does not materially prejudice
Parent or the Surviving Corporation. The Surviving Corporation may, at its own
expense: (i) participate in the defense of any claim, suit, action or
proceeding; or (ii) at any time during the course of any such claim, suit,
action or proceeding, assume the defense thereof, unless the Indemnified Parties
(or any of them) determine in good faith (after consultation with legal counsel)
that there is, under applicable standards of professional conduct, a conflict or
any significant issue between the positions of Parent and any of such
Indemnified Parties, provided that the Surviving Corporation's counsel shall be
reasonably satisfactory to the Indemnified Parties. If the Surviving Corporation
assumes such defense, the Indemnified Parties shall have the right (but not the
obligation) to participate in the defense thereof and to employ counsel, at
their own expense, separate from the counsel employed by the Surviving
Corporation. Whether or not the Surviving Corporation chooses to assume the
defense of any such claim, suit, action or proceeding, the Surviving Corporation
and Parent shall cooperate in the defense thereof. If the Surviving Corporation
fails to so assume the defense thereof, the Indemnified Parties may retain
counsel reasonably satisfactory to the Surviving Corporation and the Surviving
Corporation shall pay the reasonable fees and expenses of such counsel promptly
after statements therefor are received, provided that each applicable
Indemnified Party has executed an undertaking to repay such amounts if it is
ultimately determined that such Indemnified Party is not entitled to be
indemnified by Parent under Section 5.10(a). Neither Parent nor the Surviving
Corporation shall be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld). The Indemnified
Parties as a group may retain only one law firm (in addition to local counsel)
to represent them with respect to a single action unless any Indemnified Party
determines in good faith (after consultation with legal counsel) that there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
(d) The obligations of Parent and the Surviving Corporation under Section
5.10(a) are subject to the conditions that each Indemnified Party shall comply
with the reasonable requests of the Surviving Corporation and Parent in
defending or settling any action for which indemnification is sought and that
any Indemnified Party shall approve any proposed settlement of any such action
if (i) such settlement involves no finding or admission of any liability (or any
plea of nolo contendre by such Indemnified Party), and (ii) the sole relief
provided in connection with such settlement is monetary damages that are paid in
full by the Surviving Corporation or Parent.
Section 5.11 Obligations of Merger Subsidiary. Advantage will take all actions
necessary to cause Parent and Merger Subsidiary to perform, and Parent will take
all action necessary to cause Merger Subsidiary to perform, their respective
obligations under this Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement.
Section 5.12 Antitakeover Statutes. If any Takeover Statute is or may become
applicable to the Merger, each of Parent and Company shall take such actions as
are necessary so that the transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of any Takeover Statute on
the Merger.
Section 5.13 Employee Benefits. Following the Effective Time, Parent shall, or
shall cause the Surviving Corporation to, (i) honor all obligations under
employment or severance agreements of Company or its Subsidiaries and (ii) pay
all benefits to the extent vested or which become vested in the ordinary course
of business through the Effective Time under employee benefit plans, programs,
policies and arrangements of Company or its Subsidiaries in accordance with the
terms thereof.
Section 5.14 Integration Team. Parent and Company shall, as soon as reasonably
practicable after the signing of this Agreement, create a task force comprised
of key employees of Parent and Company which shall review the policies and
procedures of Parent and Company and make recommendations for the successful
integration of the business of Company into the business of Parent.
ARTICLE VI
Conditions to the Merger
Section 6.1 Conditions to the Obligations of Each Party. The obligations of
Company, Parent and Merger Subsidiary to consummate the Merger are subject to
the satisfaction of the following conditions:
(a) this Agreement and the transactions contemplated hereby shall have been
approved and adopted by the shareholders of Company by the Company Requisite
Vote;
(b) any applicable waiting period under the HSR Act relating to the transactions
contemplated by this Agreement shall have expired; and
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit or enjoin the consummation of the
Merger.
Section 6.2 Conditions to the Obligations of Parent and Merger Subsidiary. The
obligations of Parent and Merger Subsidiary to consummate the Merger are subject
to the satisfaction (or waiver by Parent) of the following further conditions:
(a) Company shall have performed in all material respects all its obligations
and complied in all material respects with all its covenants hereunder required
to be performed or complied with by it at or prior to the Effective Time;
(b) the representations and warranties of Company contained in this Agreement
shall be true and correct in all respects at and as of the Effective Time, as if
made at and as of such time (other than representations and warranties that
address matters only as of a particular date, which shall be true and correct as
of such date), with only such exceptions as, individually or in the aggregate,
have not had and would not have a Material Adverse Effect on Company (it being
understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect" and
materiality qualifications and other qualifications based on the word "material"
or similar phrases contained in such representations and warranties shall be
disregarded, and (ii) any update of or modification to the Company Disclosure
Schedule made or purported to have been made after the date of this Agreement
shall be disregarded);
(c) no event, occurrence or development shall have occurred since the date of
this Agreement and be continuing that, individually or in the aggregate, has had
or would reasonably be expected to have a Material Adverse Effect on Company;
and
(d) Parent shall have received a certificate signed by the chief executive
officer and chief financial officer of Company to the effect set forth in
clauses (a), (b) and (c).
Section 6.3 Conditions to the Obligations of Company. The obligations of Company
to consummate the Merger are subject to the satisfaction (or waiver by Company)
of the following further conditions:
(a) Parent shall have performed in all material respects all of its obligations
and complied in all material respects with all of its covenants hereunder
required to be performed or complied with by it at or prior to the Effective
Time;
(b) the representations and warranties of Advantage and Parent contained in this
Agreement shall be true and correct in all respects at and as of the Effective
Time, as if made at and as of such time (other than representations and
warranties that address matters only as of a particular date which shall be true
and correct as of such date), with only such exceptions as, individually or in
the aggregate, have not had and would not have a Material Adverse Effect on
Advantage or Parent (it being understood that, for purposes of determining the
accuracy of such representations and warranties, all "Material Adverse Effect"
and materiality qualifications and other qualifications based on the word
"material" or similar phrases contained in such representations and warranties
shall be disregarded); and
(c) Company shall have received a certificate signed by the chief executive
officer and chief financial officer of Advantage and Parent to the effect set
forth in clauses (a) and (b).
ARTICLE VII
Termination
Section 7.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time (notwithstanding any approval
of this Agreement by the shareholders of Company):
(a) by mutual written consent of Company, Parent and Merger Subsidiary;
(b) by either Company or Parent:
(i) if the Merger has not been consummated by June 30, 2001 (the "End
Date"); or
(ii) if the Company Shareholder Approval shall not have been obtained by
reason of the failure to obtain the Company Requisite Vote at a duly
held meeting of shareholders or any adjournment thereof;
(c) by either Company or Parent (so long as such party has complied in all
material respects with its obligations under Section 5.6), if consummation of
the Merger would be prohibited by any law or regulation or if any injunction,
judgment, order or decree enjoining Company or Parent from consummating the
Merger is entered and such injunction, judgment, order or decree shall become
final and nonappealable;
(d) by Company:
(i) if the Company Board shall have received an Acquisition Proposal which
the Company Board has determined is a Superior Proposal; provided (1)
Company shall have given Parent at least seventy-two hours' advance
notice of any termination pursuant to this Section 7.1(d)(i), (2)
during such seventy-two hour period Company shall, and shall cause its
financial and legal advisors to, negotiate in good faith with Parent if
Parent so requests to make such adjustments in the terms and conditions
of this Agreement as would enable Company to proceed with the
transactions contemplated hereby, and (3) if required, Company shall
have made the payment referred to in Section 7.3(b) hereof; or
(ii) upon a breach of any representation, warranty, covenant or agreement of
Parent, or if any representation or warranty of Advantage or Parent
shall become untrue, in either case which breach or misrepresentation
or warranty shall not have been cured within 30 days following written
notice from Company such that the conditions set forth in Section
6.3(a) and 6.3(b) would be incapable of being satisfied by the End
Date;
(e) by Parent:
(i) (x) the Company Board shall have withdrawn, or modified or changed in a
manner adverse to Parent, its approval or recommendation of this
Agreement and the Merger or shall have recommended a Superior Proposal
with a person other than Parent or its Subsidiaries, (y) Company shall
have entered into a definitive agreement providing for a Superior
Proposal with a person other than Parent or its Subsidiaries or (z) the
Company Board shall have resolved to do any of the foregoing;
(ii) upon a breach of any representation, warranty, covenant or agreement of
Company, or if any representation or warranty of Company shall become
untrue, in either case which breach or misrepresentation or warranty
shall not have been cured within a reasonable period of time following
written notice from Parent such that the conditions set forth in
Section 6.2(a) and 6.2(b) would be incapable of being satisfied by the
End Date; or
(iii) upon a knowing, willful and material breach by any member of the
Company Board or any of Company's financial or legal advisors of the
provisions of Section 5.4, if such breach shall not have been cured
within a reasonable period of time following written notice from
Parent.
The party desiring to terminate this Agreement pursuant to clauses (b),
(c), (d) or (e) of this Section 7.1 shall give written notice of such
termination to the other party in accordance with Section 8.1, specifying the
provision hereof pursuant to which such termination is effected.
Section 7.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 7.1, this Agreement shall become void and of no effect with no liability
on the part of any party hereto, except that (a) the agreements contained in
Section 7.2 and in Section 7.3 and the Advantage Confidentiality Agreement shall
survive the termination hereof and (b) no such termination shall relieve any
party of any liability or damages resulting from any willful material breach by
that party of this Agreement. Notwithstanding anything else contained in this
Agreement, (A) the right to terminate this Agreement under this Section 7.1
shall not be available to any party whose failure to fulfill its obligations or
to comply with its covenants under this Agreement in all material respects has
been the cause of, or resulted in, the failure to satisfy any condition to the
obligations of either party hereunder, and (B) no party that is in material
breach of its obligations hereunder shall be entitled to any payment of any
amount from the other party pursuant to Section 7.3(b) or 7.3(c).
Section 7.3 Payments.
(a) Except as otherwise specified in this Section 7.3 or agreed in writing by
the parties, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated by this Agreement shall be paid by the party
incurring such cost or expense, except that each of Parent and Company shall
bear and pay one-half of the filing fees under the HSR Act.
(b) If at the time of termination of this Agreement none of Advantage, Parent or
Merger Subsidiary is in material breach of its representations, warranties,
covenants or agreements under this Agreement and:
(i) Company shall terminate this Agreement pursuant to Section 7.1(d)(i) hereof
or Parent shall terminate this Agreement pursuant to Section 7.1(e)(i) hereof,
or
(ii) (x) Company or Parent shall terminate this Agreement pursuant to Section
7.1(b)(ii) or Parent shall terminate this Agreement pursuant to Section
7.1(e)(ii) (provided that the breach or failure to perform by Company giving
rise to Parent's right to terminate under Section 7.1(e)(ii) shall be willful
and material), (y) prior to such termination (but after the date of this
Agreement), a bona fide Acquisition Proposal shall have been communicated in
writing to the Company Board, publicly disclosed or made directly to Company's
shareholders or any person shall have publicly announced or communicated in
writing to the Company Board an intention (whether or not conditional) to make a
bona fide Acquisition Proposal, and (z) within nine months of such termination
Company enters into a definitive agreement with respect to an Acquisition
Proposal or an Acquisition Proposal is consummated,
then Company shall pay to Parent an amount equal to $3,500,000 (the "Termination
Fee"), payable by wire transfer of immediately available funds, such payment to
be made (A) in the case of a termination contemplated by clause (b)(i), no later
than immediately prior to such termination (or within one (1) business day
following such termination, if by Parent), and (B) in the case of a termination
contemplated by clause (b)(ii), on the earlier of the date Company enters into a
definitive agreement or an Acquisition Proposal is consummated. Simultaneously
with the payment of the Termination Fee, Company shall reimburse Parent for all
of its documented out-of-pocket expenses incurred in connection with this
Agreement and the transactions contemplated hereby (including documented fees
and expenses of accountants, attorneys and financial advisors and commitment
fees to lenders) up to an aggregate of $750,000 (the "Expenses").
Notwithstanding anything herein to the contrary, any amount paid by Company to
Parent pursuant to Section 7.3(c) shall reduce, on a dollar-for-dollar basis,
the aggregate amounts payable pursuant to this Section 7.3(b). Acceptance by
Parent of such payments shall constitute conclusive evidence that this Agreement
has been validly terminated and upon payment of such amounts Company shall be
fully released and discharged from any liability or obligation resulting from or
under this Agreement. Company acknowledges that the agreements contained in this
Section 7.3(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter into this
Agreement. If Parent shall successfully bring an action to enforce its rights
under this Section 7.3(b), Company shall reimburse Parent for its reasonable
fees and expenses in connection therewith and shall pay Parent interest on the
Termination Fee and Expenses from the date such amounts become payable to the
date of payment at the prime rate in effect on the date the Termination Fee
became payable as published in The Wall Street Journal.
(c) If Parent shall terminate this Agreement pursuant to Section 7.1(e)(iii),
then Company shall pay to Parent an amount equal to the Expenses and 50% of the
Termination Fee (but in no event shall such amount in the aggregate be greater
than $2,125,000), payable by wire transfer of immediately available funds no
later than one business day following such termination. Acceptance by Parent of
such payment shall constitute conclusive evidence that this Agreement has been
validly terminated and upon payment of such amount Company shall be fully
released and discharged from any liability or obligation resulting from or under
this Agreement. Company acknowledges that the agreements contained in this
Section 7.3(c) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter into this
Agreement. If Parent shall successfully bring an action to enforce its right
under this Section 7.3(c), Company shall reimburse Parent for its reasonable
fees and expenses in connection therewith and shall pay Parent interest on the
amount payable to Parent pursuant to the first sentence of this Section 7.3(c)
from the date such amount becomes payable to the date of payment at the prime
rate in effect on the date such payment becomes payable as published by The Wall
Street Journal.
ARTICLE VIII
Miscellaneous
Section 8.1 Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including telecopy or similar writing) and shall
be given:
if to Advantage or Parent, to: Advantage Management Holdings Corp.
KTC/AMG Holdings Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
President and Chief Executive Officer
with a copy to (which shall
not constitute notice): Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
if to Company, to: Kenan Transport Company
University Square - West
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
with a copy to: (which shall ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ P.L.L.C.
not constitute notice) Suite ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
and to: ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (a) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section 8.1 and
the appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section 8.1. Rejection or
other refusal to accept or the inability to deliver because of changed address
of which no notice was given shall be deemed to be receipt of the notice as of
the date of such rejection, refusal or inability to deliver.
Section 8.2 Entire Agreement; Non-Survival of Representations and
Warranties; Third Party Beneficiaries.
(a) This Agreement (including any exhibits hereto) and the Advantage
Confidentiality Agreement constitute the entire agreement among the parties with
respect to the subject matter hereof and thereof and supersede all prior
agreements, understandings and negotiations, both written and oral, between the
parties with respect to such subject matter. None of this Agreement, the
Advantage Confidentiality Agreement or any provision hereof or thereof is
intended to confer on any person other than the parties hereto or thereto any
rights or remedies (except that Articles I and II and Sections 5.10 and 5.13 are
intended to confer rights and remedies on the persons specified therein).
(b) The representations and warranties of Company and Parent contained herein or
in any schedule, instrument or other writing delivered pursuant hereto shall not
survive the Effective Time.
Section 8.3 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived prior to the
Effective Time if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Company and Parent or, in the case of a
waiver, by the party against whom the waiver is to be effective; provided that
after the adoption of this Agreement and the Plan of Merger by the shareholders
of Company, there shall be made no amendment that by law requires further
approval by shareholders without the further approval of such shareholders.
(b) No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
Section 8.4 Successors and Assigns. The provisions of this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the written consent of the other parties hereto.
Section 8.5 Governing Law. This Agreement shall be construed in accordance with
and governed by the law of the State of North Carolina (without regard to
principles of conflict of laws).
Section 8.6 Jurisdiction. Any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated by this Agreement shall be brought
against any of the parties in any federal court located in the State of North
Carolina, or any North Carolina state court located in Orange County, and each
of the parties hereto hereby consents to the exclusive jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and waives any objection to venue laid therein. Process in
any such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the State of North Carolina. Without limiting
the generality of the foregoing, each party hereto agrees that service of
process upon such party at the address referred to in Section 8.1, together with
written notice of such service to such party, shall be deemed effective service
of process upon such party.
Section 8.7 Waiver Of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 8.8 Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
Section 8.9 Interpretation. When a reference is made in this Agreement to a
Section or Company Disclosure Schedule, such reference shall be to a Section of
this Agreement or to the Company Disclosure Schedule as applicable, unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The phrases "the date of this
Agreement," "the date hereof," and terms of similar import, unless the context
otherwise requires, shall be deemed to mean January 25, 2001. All terms defined
in this Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant thereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such term. Any agreement, instrument or
statute defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument or statute as from time to
time amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession of
comparable successor statutes and references to all attachments thereto and
instruments incorporated therein. References to a person are also to its
permitted successors and assigns. Each of the parties has participated in the
drafting and negotiation of this Agreement. If an ambiguity or question of
intent or interpretation arises, this Agreement must be construed as if it is
drafted by all the parties and no presumption or burden of proof will arise
favoring or disfavoring any party by virtue of authorship of any of the
provisions of this Agreement. Notwithstanding anything in this Agreement to the
contrary, the parties acknowledge and agree (a) that subclause (i) of Section
3.10(l) shall not be construed to establish any standard of materiality and (b)
that the occurrence of any event described in such Section 3.10(l)(i) shall not
necessarily, in and of itself, constitute a Material Adverse Effect.
Section 8.10 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated. Upon such determination that any term, provision, covenant or
restriction of this Agreement is invalid, void, unenforceable or against
regulatory policy, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the extent possible.
Section 8.11 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
federal court located in the State of North Carolina or any North Carolina state
court, in addition to any other remedy to which they are entitled at law or in
equity.
Section 8.12 Joint and Several Liability. Advantage, Parent and Merger
Subsidiary hereby agree that they will be jointly and severally liable for all
covenants, agreements, obligations and representations and warranties made by
any of them in this Agreement.
[The remainder of this page is left blank intentionally]
IN WITNESS WHEREOF, the parties have hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
ADVANTAGE MANAGEMENT HOLDINGS CORP.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive Officer
KTC/AMG HOLDINGS CORP.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive Officer
KENAN TRANSPORT COMPANY
By: /s/▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
KTC ACQUISITION CORP.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President and Chief Executive Officer
Exhibit A
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (this "Agreement") is dated as of January __,
2001, and is by and among KTC Acquisition Corp., a North Carolina corporation
("Merger Sub"), KTC/AMG Holdings Corp., a Delaware corporation
("Parent"), and the shareholder listed on Schedule A hereto (the "Shareholder").
RECITALS
WHEREAS, Advantage Management Holdings Corp., a Delaware corporation,
Parent and Merger Sub have entered into an Agreement and Plan of Merger, dated
as of the date hereof (the "Merger Agreement"), with Kenan Transport Company, a
North Carolina corporation (the "Company"), which provides, among other things,
upon the terms and subject to the conditions thereof, that the Merger Sub will
merge with and into the Company (the "Merger") and all the outstanding shares of
Common Stock, no par value, of the Company ("Company Common Stock") (other than
shares of Company Common Stock held by Merger Sub and Parent) will be converted
into the right to receive $35 per share in cash (capitalized terms not defined
in this Agreement shall have the meanings ascribed to them in the Merger
Agreement); and
WHEREAS, as of the date hereof, the Shareholder owns (beneficially or
of record) the number of shares of Company Common Stock set forth opposite the
Shareholder's name on Schedule A hereto (the "Existing Shares"); and
WHEREAS, as a condition to the willingness of Parent and Merger Sub to
enter into the Merger Agreement, Parent and Merger Sub have required that the
Shareholder agree, and in order to induce Parent and Merger Sub to enter into
the Merger Agreement, the Shareholder has agreed, to vote, in accordance with
the terms of this Agreement, all the Existing Shares and any shares of Company
Common Stock which may hereafter be acquired by the Shareholder (collectively,
the "Shares") in favor of the Merger Agreement and the transactions contemplated
thereby.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
COVENANTS OF THE SHAREHOLDER
Section 1.1 Disposition or Encumbrance of Shares. Except as contemplated by this
Agreement, the Shareholder shall not, directly or indirectly: (a) sell,
transfer, tender, assign, hypothecate, encumber or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding with
respect to the sale, transfer, tender, assignment, hypothecation, encumbrance or
other disposition of, any or all of the Shares or an interest therein; or (b)
grant any proxies or powers of attorney with respect to the Shares, deposit the
Shares into a voting trust or enter into a voting agreement with respect to the
Shares.
Section 1.2 Solicitation of Transactions. The Shareholder shall not, directly or
indirectly: (a) solicit, initiate or encourage (including by way of furnishing
nonpublic information) inquiries or proposals concerning any Acquisition
Proposal or have discussions or negotiations with any third party (other than
Parent or Merger Sub) regarding any Acquisition Proposal (other than the
Merger); or (b) induce or encourage any other shareholder of the Company to vote
against, or fail to vote in favor of, the Merger Agreement, the Merger and the
Plan of Merger. The Shareholder shall notify Parent of any written inquiries or
proposals it receives relating to an Acquisition Proposal.
Section 1.3 Agreement to Vote Shares. Unless this Agreement shall have
terminated in accordance with its terms, the Shareholder hereby agrees that: (a)
at any meeting (whether annual or special and whether or not an adjourned or
postponed meeting) of the holders of Company Common Stock at which shareholders
of the Company will consider the Merger Agreement and the transactions
contemplated thereby, the Shareholder shall appear at the meeting or otherwise
cause the Shares to be counted as present at the meeting for purposes of
establishing a quorum, and the Shareholder shall vote (or cause to be voted) the
Shares in favor of the Merger Agreement, the Merger and the Plan of Merger; and
(b) the Shareholder shall vote the Shares against any other Acquisition Proposal
or any other corporate action that could reasonably be expected to materially
impair or delay consummation of the Merger.
Section 1.4 No Inconsistent Agreements. The Shareholder shall not, in its
capacity as a shareholder of the Company, enter into any agreement or take any
other action that would (a) violate Section 1.1, Section 1.2 or Section 1.3 of
this Agreement or (b) reasonably be expected to materially restrict, limit or
interfere with the performance of its obligations hereunder or the consummation
of the transactions contemplated hereby or the Merger Agreement.
ARTICLE II
Representations and warranties of the shareholder
Section 2.1 Authorization, etc. The Shareholder has the right, power, authority
and capacity to execute and deliver this Agreement and to perform the
Shareholder's obligations hereunder. This Agreement has been duly authorized,
executed and delivered by the Shareholder, and constitutes the legal, valid and
binding obligation of the Shareholder, enforceable against the Shareholder in
accordance with its terms, subject to laws of general application relating to
bankruptcy, fraudulent conveyance, insolvency and the relief of debtors, and
rules of law governing specific performance, injunctive relief and other
equitable remedies. [If the Shareholder is married and the Shares constitute
community property, this Agreement has been duly executed and delivered by, and
constitutes the legal, valid and binding obligation of, the Shareholder's
spouse, enforceable against the Shareholder's spouse in accordance with its
terms, subject to laws of general application relating to bankruptcy, fraudulent
conveyance, insolvency and the relief of debtors, and rules of law governing
specific performance, injunctive relief and other equitable remedies.1]
Section 2.2 No Conflicts or Consents. The execution and delivery of this
Agreement by the Shareholder do not, and the performance of this Agreement by
the Shareholder will not: (i) conflict with or violate any law, rule,
regulation, order, decree or judgment applicable to the Shareholder or by which
the Shareholder or any of the Shareholder's properties is or may be bound or
affected; (ii) result in or constitute (with or without notice or lapse of time)
any right of termination, amendment, acceleration or cancellation of, or result
(with or without notice or lapse of time) in the creation of any encumbrance or
restriction on any of the Shares pursuant to, any contract to which the
Shareholder is a party or by which the Shareholder or any of the Shareholder's
properties is or may be bound or affected; or (iii) require any consent or
approval of any person, except in the case of clause (i), (ii) or (iii) above
where any of such events would not have a material adverse effect on the
Shareholder or otherwise impair the Shareholder's ability to satisfy the
Shareholder's obligations hereunder.
Section 2.3 Title to Securities. As of the date of this Agreement: (a) the
Shareholder either (i) holds of record or (ii) beneficially owns with the right
to vote (in the case of clause (i) and (ii), free and clear of any liens,
claims, options, rights of first refusal, co-sale rights, charges or other
encumbrances (collectively, "Liens")) the number of outstanding shares of
Company Common Stock set forth under the heading "Number of Shares" on Schedule
A hereof; [and] (b) [the Shareholder holds (free and clear of any Liens) the
options and other rights to acquire shares of Company Common Stock set forth
under the heading "Options and Other Rights" on Schedule A hereof; and (c)]2 the
Shareholder does not directly or indirectly own any shares of capital stock or
other securities of the Company, or any option, warrant or other right to
acquire (by purchase, conversion or otherwise) any shares of capital stock or
other securities of the Company, other than the shares [and options and other
rights]2 specified on Schedule A hereof. Except as set forth on Schedule A, the
Shareholder has sole voting power with respect to the Shares.
Section 2.4 Accuracy of Representations. The representations and warranties
contained in this Agreement are accurate in all material respects as of the date
of this Agreement, and will be accurate in all material respects at all times
through the earlier to occur of the Effective Time or the termination of the
Merger Agreement in accordance with its terms.
Section 2.5 Reliance by Parent and Merger Sub. The Shareholder understands and
acknowledges that Parent and Merger Sub are entering into the Merger Agreement
in reliance upon the Shareholder's execution and delivery of this Agreement.
ARTICLE III
MISCELLANEOUS
Section 3.1 Expenses. All costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
Section 3.2 Further Assurances. The parties hereto will execute and deliver all
such further documents and instruments and take all such further action as may
be necessary in order to consummate the transactions contemplated hereby.
Section 3.3 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties hereto shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or in equity, and such remedies shall be cumulative and not
exclusive. The Shareholder further agrees that neither Parent, Merger Sub nor
any other person or entity shall be required to obtain, furnish or post any bond
or similar instrument in connection with or as a condition to obtaining any
remedy referred to in this Section 3.3, and the Shareholder irrevocably waives
any right the Shareholder may have to require the obtaining, furnishing or
posting of any such bond or similar instrument.
Section 3.4 Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral, among
the parties hereto with respect to the subject matter hereof.
Section 3.5 Assignment. This Agreement shall not be assigned by operation of law
or otherwise (other than by will or the laws of descent and distribution)
without the written consent of all parties hereto. Any purported assignment
shall be void.
Section 3.6 Parties in Interest. This Agreement shall be binding upon, inure
solely to the benefit of, and be enforceable by, the parties hereto and their
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to or shall confer upon any other person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
Section 3.7 Amendment; Waiver. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto. Any waiver under this
Agreement shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
Section 3.8 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
this Agreement is not affected in any manner materially adverse to any party.
Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the terms of
this Agreement remain as originally contemplated to the fullest extent possible.
Section 3.9 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, telecopy, or
by registered or certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address for
a party as shall be specified in a notice given in accordance with this Section
3.9):
if to Merger Sub or Parent:
KTC/AMG Holdings Corp.
KTC Acquisition Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇.▇▇▇▇
President and Chief Executive Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to (which shall not constitute notice):
Fulbright & ▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to a Shareholder:
at the address set forth on Schedule A
with a copy to (which shall not constitute notice):
Section 3.10 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of North Carolina applicable to
contracts executed in and to be performed in that State without regard to its
conflict of law principles or rules.
Section 3.11 Termination. This Agreement shall terminate automatically without
any further action of the parties hereto upon the earlier of (a) the Effective
Time and (b) the termination of the Merger Agreement in accordance with its
terms.
Section 3.12 Shareholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as a director or
officer. The person(s) signing this Agreement as Shareholder are doing so solely
in his, her or its capacity as the record or beneficial owner of, or as the
trustee of a trust which is the record or beneficial owner of, shares of Company
Common Stock, and nothing herein shall limit or affect any actions taken by the
Shareholder (or a trustee or beneficiary of a trust which is a Shareholder) in
his or her capacity as an officer or director of the Company.
Section 3.13 Independence of Obligations. The covenants and obligations of the
Shareholder set forth in this Agreement shall be construed as independent of any
other agreement or arrangement between the Shareholder, on the one hand, and the
Company, Merger Sub or Parent, on the other. The existence of any claim or cause
of action by the Shareholder against the Company, Merger Sub or Parent shall not
constitute a defense to the enforcement of any of such covenants or obligations
against the Shareholder.
Section 3.14 Waiver. No failure on the part of Parent to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of
Parent or Merger Sub in exercising any power, right, privilege or remedy under
this Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege or
remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy. Parent shall not be deemed to have waived any
claim arising out of this Agreement, or any power, right, privilege or remedy
under this Agreement, unless the waiver of such claim, power, right, privilege
or remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of Parent; and any such waiver shall not be applicable or
have any effect except in the specific instance in which it is given.
Section 3.15 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 3.16 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
Agreement as of the date first written above.
KTC/AMG HOLDINGS CORP.
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
KTC ACQUISITION CORP.
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
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SHAREHOLDER:
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A-1
SCHEDULE A
Name, Address, Telecopy No. of Shareholder Number of Shares
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1 This sentence is to be included only in agreements executed by individuals.
2 These clauses are to be included only in agreements with executive officers.
B-1
EXHIBIT B
PLAN OF MERGER
A. Corporations Participating in Merger.
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KTC Acquisition Corp., a North Carolina corporation (the "Merging
Corporation"), shall merge (the "Merger") into Kenan Transport Company, a North
Carolina corporation (the "Company"), which shall be the surviving corporation
(the "Surviving Corporation").
B. Merger.
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The Merger shall be effected pursuant to the terms and conditions of
this Plan of Merger (the "Plan") and the Agreement and Plan of Merger, dated as
of January 25, 2001, among Advantage Management Holdings Corp., a Delaware
corporation, KTC/AMG Holdings Corp., a Delaware corporation ("Parent
Corporation"), the Merging Corporation and the Company (the "Merger Agreement").
At the Effective Time (as defined below), the corporate existence of the Merging
Corporation shall cease, and the corporate existence of the Surviving
Corporation shall continue. The time when the Merger becomes effective is
referred to herein as the "Effective Time."
C. Conversion and Exchange of Shares.
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As of the Effective Time, by virtue of the Merger and without any
action on the part of any holder of any capital stock of the Parent Corporation,
the Merging Corporation or the Company:
1. Company Common Stock. Each share of common stock, no par
value, of the Company ("Company Common Stock") issued and
outstanding immediately prior to the Effective Time (other
than any shares of Company Common Stock held directly by the
Parent Corporation and the Merging Corporation), automatically
shall be converted into the right to receive $35 in cash
without interest (the "Merger Consideration").
2. Cancellation of Certain Shares. Each share of Company Common Stock
held directly by the Parent
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Corporation and the Merging Corporation immediately prior to
the Effective Time shall be cancelled and extinguished, and no
consideration shall be delivered therefor.
3. Merging Corporation Common Stock. Each share of common stock,
no par value, of the Merging Corporation issued and
outstanding immediately prior to the Effective Time shall
automatically be converted into one validly issued, fully paid
and nonassessable share of common stock, no par value, of the
Surviving Corporation.
D. Exchange Procedures.
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Promptly after the Effective Time, the Parent Corporation shall cause
___________________, as payment agent under the Merger Agreement (the "Payment
Agent"), to mail to each holder of record as of the Effective Time of a
certificate or certificates (the "Certificates") that immediately prior to the
Effective Time represented outstanding shares of Company Common Stock which were
converted into the right to receive the Merger Consideration (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title shall pass, only upon delivery of the Certificates to the Payment
Agent and shall be in such form and have such provisions as the Parent
Corporation shall reasonably specify) and (ii) instructions for effecting the
exchange of the Certificates for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Payment Agent or to such other agent or
agents as may be appointed by the Parent Corporation, together with such letter
of transmittal duly completed and validly executed in accordance with the
instructions thereto and such other documents as may reasonably be required, the
holder of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration in accordance with the Merger Agreement, and the
Certificate so surrendered shall forthwith be cancelled. Until so surrendered,
each outstanding Certificate will be deemed from and after the Effective Time,
for all corporate purposes, to evidence only the right to receive the Merger
Consideration. No interest shall be paid or accrued on any amount payable upon
surrender of any Certificate. If any portion of the Merger Consideration is to
be paid to a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition to such payment that the
Certificate so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the person requesting such payment shall pay to the
Payment Agent any transfer or similar taxes required as a result of such payment
to a person other than the registered holder of such Certificate or establish to
the satisfaction of the Payment Agent that such tax has been paid or is not
payable. Any Merger Consideration made available to the Payment Agent pursuant
to the Merger Agreement which remains undistributed for six months after the
Effective Time shall be returned by the Payment Agent to the Surviving
Corporation, which shall thereafter act as Payment Agent, and thereafter any
holder of unsurrendered Certificates shall look as a general creditor only to
the Parent Corporation and the Surviving Corporation for payment of any funds to
which such holder may be due, subject to applicable law.
E. No Further Ownership Rights in Company Common Stock.
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The Merger Consideration paid in exchange of shares of Company Common
Stock in accordance with the terms hereof shall be deemed to have been paid in
full satisfaction of all rights pertaining to such shares of Company Common
Stock, and there shall be no further registration of transfers on the records of
the Surviving Corporation of shares of Company Common Stock that were
outstanding immediately prior to the Effective Time. If after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Plan.
F. Abandonment.
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After approval of this Plan by the shareholders of the Merging
Corporation and the Surviving Corporation, and at any time prior to the
Effective Time, the board of directors of the Company may abandon the Merger.